Amid the push to enact the SECURE Act, new research shows that small business owners strongly believe the legislation will help them offer 401(k) plans that compete with large firms’ plans.
According to a forthcoming study, the Nationwide Retirement Institute found that nearly 60% of small business owners think the SECURE Act would have a positive impact on their ability to offer a 401(k) plan.
What’s more, these business owners believe the SECURE Act would help level the playing field when it comes to offering workplace retirement plans that are competitive with large corporations. Among business owners who are familiar with the SECURE Act, 80% say that enactment of the legislation will allow them to offer a 401(k) plan that rivals those offered at large corporations. In addition, 84% say the legislation should make it easier for small business owners to offer a 401(k).
The survey was fielded from Aug. 22-28, 2019, consisting of a sample of 400 U.S. business owners who have between 11 and 500 employees and who offer a 401(k) plan.
“Many small business owners do not provide a workplace retirement plan because of high cost, legal complexity or the lack of time for administration,” Eric Stevenson, president of Nationwide Retirement Plans, tells NAPA. “Also, with record low unemployment making it harder for small businesses to retain top talent and a growing retirement preparedness problem, the SECURE Act offers a solution – multiple employer plans.”
Among the SECURE Act’s most important provisions is one that would create “pooled employer plans,” or open MEPs. Stevenson contends that the MEP provisions in the legislation will allow small businesses to more effectively pool their resources to offer a retirement plan that is cost effective and administratively simpler.
Openness to Learning More
Younger business owners (aged 18-34) were more likely to have heard of the SECURE Act, according to Nationwide’s findings. Overall, 84% of business owners said they are at least familiar with the SECURE Act, but this jumps to 93% for those younger owners. The low end was for those age 55 and older, where the level drops to 76%.
That said, most respondents were either comfortable with their level of knowledge about the legislation or they were interested in learning more. Here, 52% of business owners indicated that they are comfortable with their level of knowledge, while 43% indicated that they are not knowledgeable, but are interested in learning more. Only 5% of respondents indicated that they are not knowledgeable about the legislation and are not interested in learning more.
Diving deeper into the data, the survey also found similar age discrepancies with the overall level of knowledge. According to the findings, 61% of younger business owners said they comfortable with their level of knowledge, while 60% of older business owners indicated they are not knowledgeable but are interested in learning more.
The Push
The SECURE Act – formally titled the Setting Every Community Up for Retirement Enhancement Act (H.R. 1994) – was passed by the House of Representatives on May 23 by a 417-3 margin, but it has been stalled in the Senate, in part by the objections of a handful of Senators over concerns that are unrelated to retirement policy.
Even Members of Congress, however, seem to be getting restless about the legislation passing. An Oct. 15 letter from seven Republican senators to Senate Majority Leader Mitch McConnell (R-KY) urged him to take action on the SECURE Act as soon as possible.
Meanwhile, the latest call comes from Sen. Charles Grassley (R-IA), chairman of the Senate Finance Committee, which has jurisdiction over the SECURE Act and retirement tax policy issues in general. In an op-ed posted on the Fox Business News website, Grassley called on his Senate colleagues to “take immediate action on this modernization bill that improves our current retirement system while creating new savings opportunities for American workers.”
Many industry observers believe the most likely scenario for Senate passage and enactment of the SECURE Act is its inclusion in a must-pass, year-end spending bill that is necessary to keep the government open.
“The House vote in support of the SECURE Act and recent action in the Senate to pass the bill gives Nationwide strong confidence that SECURE will be enacted this year,” Stevenson notes. “Of course, in the current political climate there is a meaningful possibility that Congress won’t reach agreement ... and we’ll have to keep working next year for another opportunity to pass the bill,” he adds.
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