U.S. Department of Labor Announces Proposal to Help Small Businesses Strengthen Retirement Security for Millions of American Workers

WASHINGTON, DC – The U.S. Department of Labor today announced a Notice of Proposed Rulemaking to help small businesses strengthen retirement security in America. 

The proposed rule would make it easier for small businesses to offer retirement savings plans to their workers through Association Retirement Plans, which would allow small businesses to band together to offer 401(k) plans to their employees.   

"President Donald J. Trump is moving to expand quality, affordable workplace retirement plan options for America's small businesses and their employees. Many small businesses would like to offer retirement benefits to their employees, but are discouraged by the cost and complexity of running their own plans," said U.S. Secretary of Labor Alexander Acosta. "Association Retirement Plans give these employers a simple and less burdensome way to offer valuable retirement benefits to their employees. The proposed rule helps working Americans – and their families – take care of themselves in their retirement years."

Enhancing workplace retirement savings is critical to the financial security of America's workers. Approximately 38 million private-sector employees in the United States do not have access to a retirement savings plan through their employers. Association Retirement Plans offer these workers – and their families – enhanced savings opportunities. 

Under the proposed rule, Association Retirement Plans could be offered by associations of employers in a city, county, state, or a multi-state metropolitan area, or in a particular industry nationwide. Sole proprietors, as well as their families, would also be permitted to join such plans. In addition to association sponsors, the plans could also be sponsored through Professional Employer Organizations (PEO). A PEO is a human-resource company that contractually assumes certain employment responsibilities for its client employers. 

By expressly permitting these new plan arrangements, the proposal would enable small businesses to offer benefit packages comparable to those offered by large employers. The Department expects the plans to reduce administrative costs through economies of scale and to strengthen small businesses' hand when negotiating with financial institutions and other service providers.