A bipartisan flanking bill to incentivize more small businesses to offer pension plans has been introduced in the House.
The Starter-K Act, introduced Thursday by Rep. Linda T. Sánchez, D-Calif., and Rep. Darin LaHood, R-Ill., would create “starter” defined contribution plans. It mirrors a bill introduced in March by Sen. John Barrasso, R-Wyo., and Sen. Tom Carper, D-Del.
Under the bill, which aims to streamline regulations and reduce costs for small businesses and startups, eligible employers – those not currently offering a plan – are not required to provide matching contributions . The bill would also create a safe harbor for the heaviest non-discrimination and testing requirements for DC plans. Annual contributions would be capped at $6,000, indexed to inflation, with an additional catch-up contribution for those age 50 or older.
Eligible employees would automatically be enrolled at the default minimum level of 3% and the bill directs the Department of Labor to provide simplified reporting for the plans.
“This legislation will help small business owners provide their employees with streamlined, cost-effective retirement plans, ensuring more Americans can retire with peace of mind,” Sánchez said in a press release. .
Mr. LaHood added in the same press release, “Our bipartisan legislation will remove unnecessary and complex regulations to allow more small businesses to offer retirement plans and help more Americans secure their financial future.”
MM. Barrasso and Carper are members of the Senate Finance Committee, which is expected to soon introduce and tag a retirement security package that will likely include their Starter-K legislation.
The Finance Committee package will likely be part of the Senate SECURE 2.0 package. The Senate Committee on Health, Education, Labor and Pensions proposed its own retirement security package on Tuesday.
The House in March passed the Securing a Strong Retirement Act of 2022, known as SECURE 2.0. This bill includes a provision that would require 401(k) and 403(b) plans to automatically enroll participants when they become eligible and another that would improve the credit for small employer retirement plan start-up costs.