[Congressional Record Volume 159, Number 74 (Thursday, May 23, 2013)]
[Extensions of Remarks]
[Pages E732-E733]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




       RETIREMENT PLAN SIMPLIFICATION AND ENHANCEMENT ACT OF 2013

                                 ______
                                 

                          HON. RICHARD E. NEAL

                            of massachusetts

                    in the house of representatives

                        Wednesday, May 22, 2013

  Mr. NEAL. Mr. Speaker, today I am pleased to come before the House to 
reintroduce the Retirement Plan Simplification and Enhancement Act of 
2013. Our current retirement plan rules are very complicated. My bill 
includes a number of common sense reforms that will simplify the rules 
while still protecting participants.
  For example, under current law, small businesses that adopt a new 
retirement plan are eligible for a tax credit to cover some of their 
start-up costs. We're increasing the credit to $5,000 to cover all of 
these expenses. I hope this will encourage more small employers to 
sponsor retirement plans.
  Also, currently employers can exclude some part-time workers from 
participating in their 401(k) plans. As women are more likely than men 
to work part-time, these rules can be quite harmful for women in 
preparing for retirement. So my bill would require employers to allow 
certain long-term, part-time workers to make elective deferrals to 
their 401(k) plans.
  My bill also reforms the Saver's Credit. The current Saver's Credit 
provides a tax incentive for families to save for retirement. However, 
because the Saver's Credit is currently non-refundable, it does not 
benefit those who need it most--low and moderate income households who 
have little or no federal income tax liability. Therefore, my bill 
would make the Saver's Credit refundable and also incentivize taxpayers 
to pay the credit into their retirement accounts.
  The Retirement Plan Simplification and Enhancement Act also would 
establish a new automatic enrollment safe harbor. It was my legislation 
that established the existing safe harbor that promotes automatic 
enrollment in 401(k) plans. The power of inertia is a powerful tool. 
And automatically enrolling employees in 401(k)s unless they decide to 
opt out is a simple and effective way to harness this

[[Page E733]]

power of inertia. And my legislation has incentivized many employers to 
implement automatic enrollment in their 401(k) plans.
  However, the current safe harbor sets a minimum default level of 
contributions of 3 percent in the first year. Under the existing rules, 
employers can set the default at a higher percentage if they want to 
but many employers just stick with the floor amount of 3 percent. We 
all know that 3 percent is not enough savings for most American 
families--in fact, many financial institutions recommend that employees 
save at least 10 percent of their salary. So my proposal would keep the 
existing automatic enrollment but it would create a second safe harbor. 
And this second safe harbor would set the minimum default contribution 
rate at 6 percent in the first year, 8 percent in the second year and 
10 percent in all subsequent years. Now remember, employees can lower 
the rate if it's too high for them--but this proposal would use the 
power of inertia to encourage employees to save more.
  Finally, my bill would help consolidate and simplify the many 
employee notices required by retirement plans. The current rules 
require retirement plans to provide employees with lots of information 
regarding their plans. Although well intended, it has become 
information overload with many employees just ignoring the many 
notices--or even worse, it confuses employees. My bill would direct the 
Secretaries of Treasury and Labor to review the current retirement plan 
reporting and disclosure rules and make recommendations to improve 
these requirements.
  Let me conclude by saying that I also intend to keep working on 
allowing for greater disclosure to participants in an electronic 
manner. We certainly need to protect employees without computers or 
individuals who just prefer paper. However, electronic disclosure 
provides many efficiencies, saves participants money that could 
otherwise be taken from their retirement accounts, and provides easy 
access to educational and financial tools. And, therefore, I plan to 
continue working on this issue.
  My legislation provides common-sense reforms that will help Americans 
prepare for a financially secure retirement. I urge my colleagues to 
join me in supporting ``The Retirement Plan Simplification and 
Enhancement Act.''

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