Bipartisan legislation introduced on June 16 by U.S. Rep. Darin LaHood (R-IL) would create starter retirement plans that streamline regulations and lower costs for small businesses and start-ups so that more Americans have access to retirement savings.
“In Illinois and throughout America, small businesses are the biggest employers and they should be able to provide their workers with better options to save for retirement,” Rep. LaHood said. “Our bipartisan legislation will remove unnecessary, complex regulations to allow more small businesses to offer retirement plans and help more Americans secure their financial future.”
The Starter-K Act of 2022, H.R. 8125, which Rep. LaHood cosponsored with bill sponsor U.S. Rep. Linda Sánchez (D-CA), would amend the Internal Revenue Code of 1986 to provide for starter 401(k)s for employers with no retirement plans, according to the congressional record bill summary.
If enacted, the bill would create “starter” defined contribution plans under Sections 401(k) and 403(b) to streamline regulations by providing employers a safe harbor for the nondiscrimination and top-heavy testing requirements for defined contribution plans, according to a bill summary provided by Rep. LaHood’s staff.
Employers would not be required to provide matching contributions, meaning lower costs for small businesses and start-ups, the summary says, and eligible employers would be those who do not currently offer a plan.
Additionally, among other provisions, H.R. 8125 would require that annual contributions be limited to $6,000, indexed to inflation, with an additional catch-up contribution for people at least 50 years of age, according to Rep. LaHood’s bill summary.
“This legislation will help small business owners provide their employees with streamlined, cost-effective retirement plans, ensuring more Americans can retire with financial peace of mind,” said Rep. Sánchez.
U.S. Sens. John Barrasso (R-WY) and Tom Carper (D-DE) on March 30 introduced the identical S. 3955 in their chamber.