The state of Washington has become the fourth in the country toprovide for the formation of a private retirement plan marketplace for smallbusinesses.

|

On Monday, Gov. Jay Inslee signed bipartisan legislation thatwill make the new system, called the Washington Small BusinessRetirement Marketplace, available in 2017. It will provide accessto the federal MyRA plan, as well as 401(k) plans and other privateoptions, for employees of small businesses — those with fewer than100 employees.

|

The new program will be run by the Washington State Departmentof Commerce, and will establish a digital marketplace to matchemployers with private-sector plans. It will offer at least twodifferent types of plans: one that’s modeled on the SIMPLE IRA,allowing employers to contribute to the plan for their employees,and another similar to an IRA but with automatic payroll deductionsand without employer contributions. In addition, MyRA will beavailable.

|

The plan is voluntary; businesses do not have to offer theoption, and employees do not have to participate. According to theSecurities Industry and Financial Markets Association, for vendorsto be eligible to offer plans to employers, they must offer atarget date or similar fund that provides asset allocations andmaturities designed for an expected date of retirement, as well asa balanced fund. The American Council of Life Insurers said annualfees to enrollees will be limited to 100 basis points.

|

On the same day the legislation was signed, 26 U.S. senators —more than a quarter of the Senate, including the ranking members ofthe Senate HELP and Finance Committees — sent a joint letter toPresident Obama about state-based retirement plans.

|

The letter asks that the Department of Labor and the Departmentof the Treasury work to “remove any potential uncertainty withrespect to the application of federal law to the state-based reforminitiatives,” to ensure that ERISA does not preempt state plans(such as the “Secure Choice Retirement Savings” plans in Californiaand Illinois, and “similar IRA-based programs enacted in thefuture”), and that such plans “are tax-preferred at the federallevel.”

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.