ASA Releases Retirement Security Agenda
Making it easier for all Americans to save and invest for a better future is the right thing to do.
WASHINGTON – The American Securities Association (ASA) today released its 2019 retirement security agenda and called on Congress to pass bipartisan legislation to help make it easier for more Americans to save, invest, and prepare for retirement.
“At a time when too many hardworking Americans are struggling to save for retirement and prepare for other financial goals, Congress should come together to pass common sense legislation that addresses our national retirement security crisis. Making it easier for all Americans to save and invest for a better future is the right thing to do,” said ASA CEO Chris Iacovella. “We look forward to working with policymakers on both sides of the aisle to advance the principles outlined in ASA’s retirement security agenda and help tackle one of the country’s biggest challenges.”
The ASA supports a range of policies to enhance America’s retirement security, as set forth below:
Encourage Utilization of Financial Planning: To encourage access to financial advice, the ASA supports a bipartisan proposal from Sens. Rob Portman (R-OH) and Ben Cardin (D-MD) to allow employees to pay for financial planning with pre-tax dollars through employer-sponsored “cafeteria” plans. On average, individuals who use financial planning services save more and are financially better prepared, with one study suggesting that good financial planning can yield nearly 29 percent in additional retirement income.
Facilitate and Improve Small Business Retirement Plan Options: Small business owners want to help their employees with retirement issues, but small businesses often face an array of costs and burdens that make it very difficult to offer a retirement plan. The ASA supports updating rules that would stimulate savings and encourage small businesses to offer retirement plans to their employees, which is the reason the ASA supports the Retirement Enhancement and Savings Act (RESA). These changes would facilitate the creation of new plans for very small employers as well as ease the transition to a 401(k) plan when the business is ready to adopt that type of savings arrangement.
Congress Should Enhance Existing Low-Cost SIMPLE IRAs: SIMPLE IRAs have been successful in encouraging micro-businesses to begin offering retirement savings arrangements. The ASA supports (1) allowing SIMPLE IRA balances to be rolled over into other, non-SIMPLE accounts; (2) allowing mid-year SIMPLE IRA plan terminations; and (3) reducing the current 25% penalty for early SIMPLE IRA distributions to match the 10% penalty applicable to other types of retirement vehicles; and (4) allow Roth SIMPLE IRAs. We applaud Senator Susan Collins (R-ME) and we intend to fully support her efforts to make these common-sense changes become law.
Build on the Success of 529 Plans: 529 plans are an invaluable tool for families and individuals looking to save for school. Nearly every state sponsors some type of 529 plan, with most states encouraging contributions by offering tax deductions and/or credits. To encourage all Americans to start saving as soon as possible, the ASA recommends policymakers enact a modest, above-the-line federal income tax deduction for contributions made to any state’s qualified 529 plan.
Use Technology to Lower Costs: In recent years, Americans have overwhelmingly embraced digital communication over outmoded paper delivery systems. The ASA supports legislation and updated regulation that would shift the default method of delivering plan disclosures to electronic delivery while preserving an option for participants who still prefer paper notices. A shift to e-delivery would both enhance the effectiveness of ERISA communications while also driving down administrative costs which would be shared with plan participants. In addition to saving money and protecting the environment, e-delivery provides greater access for the visually impaired as well as retirement savers who are not proficient in English.
To read ASA’s full retirement security agenda, click here.