Vol. 20, No. 3 A Newspaper of General Circulation January 21, 2020
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Drawbacks, but new law may push small businesses to offer plans
A new law expanding retirement plan options for small businesses may encourage more companies to offer the benefits to their workers.  
The Setting Every Community Up for Retirement Enhancement Act, known as the SECURE Act, won final congressional approval in the Senate last month and was signed into law by President Donald Trump.  
One of the billís features makes it easier for small businesses to band together to offer 401(k) and other retirement plans. What are called Multiple Employer Plans lower the costs of administering a plan.  
The new law has its critics, though, because it dramatically shortens the period in which heirs of IRAs must take required minimum distributions. Before this law, heirs could take those distributions over their own lifetimes.  
The high costs of more complex plans like 401(k)s have put them out of reach for many small businesses. These costs also reduce the returns employees get from their investments. So joining a plan with other companies theoretically will make it easier for small businesses to offer retirement plans.  
The law also increases the maximum tax credit small businesses get for starting plans, to $5,000 from $500.  
Half the workers in companies with fewer than 50 employees have access to retirement benefits, according to a Labor Department report.  
ďMost small businesses simply donít have the funds or staff to offer and manage retirement plans,Ē said John Arensmeyer, CEO of the advocacy group Small Business Majority.  
Whatís not known at this point is whether multiple plans going forward will have costs low enough to persuade small-business owners to join. Owners do have other options, including Simplified Employment Pension, or SEP, plans that are less complex and cheaper than 401(k) plans.  
Multiple employer plans are already offered by financial institutions and benefits companies. Small business owners can learn more about their retirement plan options in IRS Publication 560, Retirement Plans for Small Business.  
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