A SOLID RETIREMENT plan can be a strong tool for recruiting and retaining talented employees, but it’s also a costly benefit to offer. A new executive order recently signed by President Donald Trump makes it easier for small businesses, including hotels, to overcome those costs by expanding access to Multiple Employer Plans.
Trump’s Strengthening Retirement Security in America Executive Order 13847, which he signed in September, expands access to MEPs for small business owners, independent contractors and sole proprietors. The order allows small businesses to band together and employ economies of scale to offer retirement plans similar to those offered by larger companies.
AAHOA President and CEO Chip Rogers welcomed the order, saying it will strengthen retirement security.
“When determining how to create and maintain employee retirement plans, small business owners often struggle with frustratingly complex government regulations and tax laws that discourage them from offering the strongest and most attractive benefit packages for their employees. In this competitive job market, that can be a deal breaker when it comes to attracting top talent,” Rogers said.
“Only 53 percent of companies with 100 employees or fewer offer retirement plans, but by the administration instructing the Treasury and Labor Departments to drive down costs and eliminate outdated and unnecessary regulations on MEPs, we could see more Americans enrolling in proven retirement savings plans such as 401(k)s and preparing for secure retirements.”
The order quotes Bureau of Labor Statistics that show 23 percent of full-time employees in the private sector lack access to workplace retirement plans. The number increases to 34 percent when including part-time workers. BLS says small businesses are less likely to offer the plans. Last year, 53 percent of private-sector companies with fewer than 100 workers offered retirement plans compared to 89 percent of companies with 500 or more employees. Regulatory burdens were a major reason, according to the order.
“A recent survey by the Pew Charitable Trusts found that 71 percent of small- and medium-sized businesses that do not offer retirement plans were deterred from doing so by high costs; 37 percent cited high costs as their main reason for not offering such a plan,” the order said. “Federal agencies should revise or eliminate rules and regulations that impose unnecessary costs and burdens on businesses, especially small businesses, that hinder formation of workplace retirement plans.”
While the president’s order and the ensuing regulatory action are significant, legislation is needed to strengthen small-business retirement programs, Kent Mason, an attorney with Washington, D.C.-based Davis & Harman who represents several plan sponsors and service providers, told Pensions & Investments magazine.
“Expanding MEPs through the regulatory process would be a major step forward in helping small employers adopt retirement plans,” Mason said. “But because of the constraints applicable under the existing statute, regulatory expansion of MEPs may not be able to achieve nearly the same level of assistance to small employers as legislation can.”