Many small businesses do not offer access to a 401(k) plan since administration of such plans can be costly for small business owners. Right now there is a bipartisan effort in Congress to make 401(k) plans easier to use in the event of an emergency, simpler to convert to income in retirement and more accessible.

To achieve these goals Congress is looking at eliminating some of the restrictions for multiple-employer plans. Until now, multiple-employer plans were only allowed when companies were affiliated, such as through an industry organization or union. The proposal making its way through Congress would open these plans to small businesses who band together to offer employees a retirement account. By allowing multiple employers to create a plan there should be a decrease in the cost per employer. Such multiple-employer plans also permit employers to shift responsibility as a fiduciary to a third-party.

Congress hopes these changes will provide plan access to contract and temporary workers who usually lack access to 401(k) retirement plans. Multiple-employer plans would also allow greater portability for employees. Employees who move to another company within the multiple-employer plan group do not have to hassle rolling over their 401(k)’s.

If your business does not presently offer a 401(k) plan, there are other types of retirement plans employers can implement, such as SIMPLE and SEPs, although they have their own eligibility rules. Soon small business employers may have another tool for retirement planning.

If you are an employer and want to offer retirement plan options to your employees consult with your legal counsel to help decide which option is best for you and your business.

The information presented is not intended to be, and does not constitute, “legal advice.” Because each situation varies, and only brief summary information is provided here, you should not use this information as a basis for action unless you have independently verified with your own counsel that it applies to your particular situation.