Looking to offer your employees a Retirement Savings Plan? You've got some options.

There is a growing movement underway to help ensure more Americans are working toward a financially secure retirement—and for good reason.

Currently, more than half of Americans do not have sufficient savings to retire, according to the Center for Retirement Research (CRR) at Boston College’s 2020 National Retirement Risk Index (NRRI). Though the index rose a few percentage points during the pandemic, the retirement savings gap was growing long before 2020, spurring government and businesses to expand and innovate retirement savings vehicles for employees.

For small and mid-sized businesses, there are increasing opportunities to participate in 401(k) plans, which in the past may have been too difficult or expensive to create and maintain on their own. For example, companies in the same industry can join a multi-employer plan (MEP) 401(k), which allows them access to a Fortune 500-level retirement plan by pooling assets and sharing administrative costs. G&A Partners has provided this service for years, and in a movement to make retirement savings options available to more companies, we recently launched a new pooled employment plan (PEP) 401(k) option. The PEP does not require participants to be in the same industry, therefore businesses of all types and sizes can join forces to share in costs and benefits.

“The ultimate goal is to increase opportunities for all companies and their employees to have 401(k) retirement funds,” said Tilisha Conley, G&A Partners Retirement Plan Manager. “This is a huge advantage for small and medium-sized businesses as it gives many who do not currently provide employees with a retirement savings option the ability to offer a plan.”

There’s a 401(k) Retirement Option for Your Business

A 401(k) plan is a flexible retirement savings plan in which employees participate through automatic payroll deductions that are invested in the plan’s offerings—typically an assortment of stock and bond mutual funds. Your company can add value by matching a portion—or all—of your employees’ contributions, which helps them save for retirement and builds goodwill with your workforce.

Adding a retirement savings option to your company’s benefits plan also gives you an edge when it comes to recruiting talent and retaining employees. And while some companies may find it difficult—and sometimes expensive—to operate their own 401(k) plan, pooled and multiemployer plans can help address those pain points.

Pooled Employment Plans (PEPs)

The pooled employment plan (PEP) 401(k) option came to life through the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019. PEPs offer small businesses and employees many of the same benefits as a traditional (larger) 401(k) plan by providing access to a wide variety of investments that are not typically available through a small plan—or no plan at all.

Conley said for years G&A’s multiemployer plan (MEP) 401(k) has delivered clients cost savings, retirement options, and employee satisfaction, and G&A is pleased and excited to expand services for clients with the new PEP 401(k) option, which became effective by law in January 2021.

“We recognized the benefits PEPs offered to clients who were not able to take advantage of the MEP 401(k),” she said.

Both MEPs and PEPs require a plan sponsor to organize and run retirement plans. G&A fills the sponsor role and performs administrative duties for member companies, known as “adopting employers.” This benefits smaller companies not equipped to handle the costs, liability, and paperwork required to run a retirement plan.

“We take on administrative tasks so our clients can focus on their business,” Conley said.

How the SECURE Act is Reforming Retirement Savings

Passed into law on December 20, 2019, the Retirement Enhancement Act, better known as the SECURE Act, has served to provide a series of reforms that make saving for retirement easier and more accessible for Americans. According to Investopedia, the highlights of the SECURE Act include:

• Creating the Pooled Employer Plan (PEP) as a new way for unrelated employers to collectively participate in a professionally administered defined contribution plan.
• Making it easier for small businesses to offer their employees 401(k) plans by providing tax credits and protections on collective Multiple Employer Plans.
• Allowing retirement benefits for long-term, part-time employees.
• Removing maximum age limits on retirement contributions, formerly capped at age 70½.
• Raising the required minimum distribution (RMD) age to 72 from 70½.
• Allowing penalty-free withdrawals up to $5,000 from retirement plans for the birth or adoption of a child.
• Allowing penalty-free withdrawals of up to $10,000 from 529 education savings plans for the repayment of certain student loans.

While the next iteration of The Securing a Strong Retirement Act of 2020 (SECURE Act) was killed in Congress in December 2020, the House Ways and Means Committee voted unanimously on May 5, 2021, to reintroduce H.R. 2954, the Securing a Strong Retirement Act of 2021 (aka Secure Act 2.0), to the full U.S. House of Representatives. This updated version of the bipartisan bill could raise the retirement minimum distribution age from 72 to 75, expand enrollment in retirement plans, and enhance 403(b) provisions, among other changes.