The Retirement Security Act has been introduced in Congress, modifying the automatic enrollment provisions for safe harbor plans, offering another method to meet nondiscrimination requirements. The bill would create another safe harbor to that which exists today allowing employees to receive an employer match on contributions up to 10% of pay. (Currently, employee contributions are capped at 10% of annual pay, with the employer contributing a match up to 6% of annual pay). Additionally, employees could contribute more than 10% of pay, without a match on the portion exceed-ing 10%. To offset the cost of the additional match, businesses with less than 100 employees would be eligible for a new tax credit equal to the increased match.
The bill also provides relief for qualified multiple employer retirement plans in situations in which one business’ failure to meet the minimum criteria to maintain a qualified retirement plan adversely affects the benefits for all multiple employer plan participants. The Act directs the Treasury Department to issue regulations to address this issue.
planadviser.com; March 5, 2015.