There was a lot of news on the financial headlines last week, with the stock market and trade tariffs gaining what was perhaps an unfair amount of attention from the mainstream media. Retirement savings is just as important as any other form of investment, and things could become easier for millions of Americans if a new retirement bill passes through lawmakers.
You may have missed this important piece of news, but you’ll definitely want to know that the Retirement Enhancement and Savings Act (RESA) was reintroduced to the Senate on Thursday last week, continuing on from proposals that were made earlier this year and in 2016.
The act combines a number of different initiatives that would have been difficult to pass individually, and it already has widespread bipartisan support. If it passes through the system, it would improve the employer-based retirement programs that exist today.
A Focus on Small Business Retirement Savings Plans
Small businesses currently trail mid and large sized enterprises in terms of the retirement savings plans that are offered. Many smaller businesses don’t have plans at all, and employees have to instead look to individual retirement accounts or state sponsored plans. Some of the reforms that have been proposed would make it more affordable for small businesses to create retirement plans for their employees. Legislation could make it possible for small companies to join MEP plans (multi-employer plans) which would make insurance more affordable and the accounts would be more valuable. Sharing an open plan between a number of small businesses would reduce setup and administration costs.
Proposed legislation could also allow for tax breaks for small companies that introduce new retirement savings plans, which would again increase the affordability of an employer/employee system in the small business sector.
Current Options are Limited
It’s not difficult to understand why the RESA is an important proposal. Up to 10,000 US citizens reach the age of retirement every year, and many are forced to continue working due to a lack of retirement savings and poor retirement plan coverage. The RESA proposal could get more people invested in retirement accounts, and could allow better financial security for millions of Americans.
Current indications are that the RESA won’t have trouble being passed into law, thanks to widespread support throughout both the Democratic and Republican parties.
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