The Treasury Department could promote more retirement programs among small employers by making it easier for them to join multiple-employer plans, several members of the Senate Finance Committee said in a letter to Secretary Jacob Lew.
They also called for clarifying safe harbors for automatic enrollment in order to eliminate “material disincentives” that small employers face when correcting mistakes.
Unlike multiemployer plans, which are typically collectively bargained and managed, a multiple-employer plan is adopted by two or more unrelated employers. The MEP concept has not taken off with small and midsize firms due to a lack of guidance or sometimes conflicting guidance from the Internal Revenue Service and the Labor Department.
“One effective means of enhancing small business retirement plan coverage is through greater use of multiple employer plans,” said the letter, dated Monday, from committee Chairman Ron Wyden, D-Ore.; and committee members Debbie Stabenow, D-Mich.; Sherrod Brown, D-Ohio; Benjamin Cardin, D-Md.; and Bill Nelson, D-Fla. Current Treasury regulations, which have “potentially devastating tax consequences” for employees, should be revisited, the letter said. “This is a problem that can be addressed by Treasury.”
Mr. Wyden also called on Mr. Lew and IRS Commissioner John Koskinen in a separate letter Wednesday to look into “troubling” findings from a new Government Accountability Office study of individual retirement accounts, showing that while the median balance was $21,000, some 600,000 taxpayers have IRA account balances above $1 million, due in part to non-publicly traded assets that might be undervalued. “This is clearly another example of how the tax code needs to be reformed,” Mr. Wyden wrote.