DOL Proposes Association Retirement Plans
The rule would make it easier for small businesses to offer retirement benefits
On Oct. 22, 2018, the U.S. Department of Labor (DOL) announced proposed rulemaking to make it easier for small businesses to offer retirement benefits to their employees through association retirement plans (ARPs).
Under the proposal, ARPs could be operated by trade associations in a city, county, state or multi-state metropolitan area, or in a particular industry nationwide. Sole proprietors and their families would also be permitted to join such plans. In addition to trade associations, Professional Employer Organizations (PEOs) could sponsor a plan. PEOs are human resource companies that contractually assume certain employment responsibilities for clients.
By permitting these new plan arrangements, DOL expects that small businesses can reduce administrative costs and offer benefit packages comparable to those offered by large employers. According to DOL, nearly 38 million private-sector workers are not currently offered employer-based retirement plans.
“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 Labor Secretary Alexander Acosta. “Association Retirement Plans give these employers a simple and less burdensome way to offer valuable retirement benefits to their employees.”
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