The FINANCIAL — The proposed Department of Labor (DOL) rule to change the definition of fiduciary could impact 9 million U.S. households that depend on small employer-provided retirement plans, a new report from the U.S. Chamber of Commerce said on June 9.
The report, “Locked Out of Retirement: The Threat to Small Business Retirement Savings,” was authored by Drinker Biddle & Reath Counsel Brad Campbell, and focuses on the impact the proposed rule would have small businesses and their employees, most notably those who use Simplified Employee Pension IRAs (SEP IRA’s) and Savings Incentive Match Plan for Employees IRAs (SIMPLE IRAs).
“Nine million small business supported households will either completely lose access to employer-sponsored retirement plans or face dramatically higher fees under the overly-broad and unworkable Department of Labor plan,” said David Hirschmann, president and CEO of the Chamber’s Center for Capital Markets Competitiveness. “The irony is that the DOL’s proposed regulations risk hurting the very small businesses and workers they are intended to protect.”
With SEP and SIMPLE IRAs as popular choices for retirement plans, the report finds that the proposed regulatory expansion would change the rules governing how financial advice is given to $472 billion in small employer-provided retirement plans, according to the U.S. Chamber of Commerce.
“Small businesses want to provide retirement benefits to their workers and currently do so through SEP and SIMPLE IRA plans, which would be directly impacted by the DOL proposal. Small business owners choose plans based on the individual retirement account system rather than 401(k) or similar ‘traditional’ retirement plans due to cost, administrative complexity, or eligibility rules,” said Randy Johnson, senior vice president for Labor, Immigration and Employee Benefits at the Chamber. “Unfortunately, this proposed rule is going to make it more difficult and costly for small businesses to offer any retirement plan.”