Request a Proposal

Automatic Retirement Plan Act (ARPA)

This bill, introduced in December 2017, would require a company/organization to offer a 401(k) or 403(b) plan to its employees, deferring a minimum of 6% of employees’ salaries, and include an automatic escalation feature. A particular escalation percentage is not specified. The bill would also permit employees to request that 50% or more of the distributions from their retirement plan accounts to be invested in an investment vehicle that guarantees lifetime income, such as annuity.

Such legislation, if passed, would be effective in 2020 and apply to all employers except those with less than 10 employees, those that qualify as governmental or church organizations or those that have been in business for less than 3 years. For employers with less than 100 employees earning at least $5,000 in 2021, the bill would apply in 2022. Any employer failing to comply with the law will be assessed a fine of $10 per employee per day.

There are some grandfathered situations. Employers that already offer qualified plans would be grandfathered for 6 years post-enactment, at which time they would be subject to the new law. Companies offering such plans that have 100 or fewer employees earning a minimum of $5,000 in the year prior would be grandfathered for 8 years post bill enactment, at which time they would be subject to the new law. With respect to multiple employer-sponsored plans, the bill would permit plans to pool with plans outside of common ownership/business purpose. Additionally, one employer’s compliance failing would not jeopardize an entire multi-employer plan. The IRS would provide guidance for “pooled” provider duties. Lastly, state sponsored automatic IRAs in existence pre-enactment would be permitted. No new state-sponsored automatic IRAs would be permitted

(; December 14, 2017)