Sánchez, LaHood introduce legislation to expand access to retirement plans

Statement

Today, Congresswoman Linda T. Sánchez (D-CA) and Congressman Darin LaHood (R-IL) introduced the Starter-K Act, bipartisan legislation that will expand access to retirement savings for more Americans. Companion legislation has been introduced in the Senate by Senators John Barrasso (R-WY) and Tom Carper (D-DE).

Only half of small businesses with fewer than 50 employees currently provide a retirement plan for their employees. The Starter-K Act creates starter retirement plans that streamline regulations and lower costs for small businesses and start-ups, resulting in more access to easy retirement savings. Employees of participating small businesses are automatically enrolled, meaning easier retirement savings up to $6,000 per year.

"Small businesses fuel our economy and allow our communities to thrive," said Congresswoman Linda T. Sánchez. "Unfortunately, the hard-working Americans who keep our small businesses running are often left with few options to save for retirement. This legislation will help small business owners provide their employees with streamlined, cost-effective retirement plans, ensuring more Americans can retire with financial peace of mind."

"In Illinois and throughout America, small businesses are the biggest employers, and they should be able to provide their workers with better options to save for retirement," said Congressman Darin LaHood. "Our bipartisan legislation will remove unnecessary, complex regulations to allow more small businesses to offer retirement plans and help more Americans secure their financial future."

The Starter-K Act creates "starter" defined contribution plans (DC) under Sections 401(k) and 403(b).

These starter DC plans would streamline regulations by providing employers a safe-harbor for the nondiscrimination and top-heavy testing requirements for defined contribution plans.
Employers are not required to provide matching contributions, meaning lower costs for small businesses and start-ups.
Eligible employers are those who do not currently offer a plan.
Annual contributions would be limited to $6,000, indexed to inflation (with an additional catch-up contribution for those at least age 50).
Eligible employees are automatically enrolled at the minimum default level of 3% of pay.
Directs the Department of Labor (DOL) to provide simplified reporting for the plans.

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