Warner-Collins bill would reduce federal filing costs for small business retirement plans

U.S. Sens. Mark R. Warner (D-VA), a member of the Senate Finance Committee, and Susan Collins (R-ME), the Chairman of the Senate Aging Committee, have introduced bipartisan legislation that would reduce duplicate filing costs for small businesses looking to offer retirement plans to their employees and sole-proprietors.

“Increasing access to workplace retirement plans is a crucial step in providing a secure retirement to millions of Americans,” said Sen. Warner. “When workers have access to a retirement plan through their employer, nearly 80 percent choose to participate – compared to just 10 percent who do without access through their employers, according to the Bureau of Labor Statistics. As the nature of work continues to change, I am pleased to introduce this bipartisan legislation with Senator Collins to make it easier for small businesses to offer this important benefit to their employees,” Warner was quoted as saying in a press release.

“Our legislation will help promote retirement security by making it easier and less expensive for small businesses to establish retirement plans, increasing their accessibility to employees and helping to ensure that those who worked hard for decades do not spend their retirement in poverty,” Sen. Collins was quoted as saying in the release.

S. 3307 directs the Department of Labor (DOL) and the Treasury Department to allow employers and sole-proprietors participating in retirement plans administered the same way to file a single aggregated Form 5500, a required annual return that provides important compliance information to DOL and Treasury.

Under current law, despite sharing a common administrative framework, each individual plan is still required to file a separate Form 5500 to satisfy reporting requirements under the Employee Retirement Income Security Act and the Internal Revenue Code. S. 3307 will eliminate duplicative reporting by plan administrators, which will reduce costs for small businesses that maintain retirement plans. To file an aggregated Form 5500, the retirement plans would need to have the same trustee, fiduciary, plan administrator, plan year and investment menu.

To provide DOL and Treasury time to implement this change, the proposal has an effective date of no later than January 1, 2020.