Two members of Congress today lobbied their colleagues on behalf of a bill that would encourage small employers to enroll employees in SIMPLE IRA plans automatically.
Reps. Ron Kind, D-Wis., and Kenny Hulshof, R-Mo., appeared as witnesses at a hearing of the House Ways and Means Committee Select Revenue Measures Subcommittee to talk about H.R. 5160, the Small Businesses Add Value for Employees Act.
SIMPLE IRA plans are supposed to be a relatively simple retirement plan option for employers with 100 or fewer workers.
In addition to helping the employers sponsoring the plans add an automatic enrollment feature, H.R. 5160 would increase the amounts employers could contribute to the plans each year and increase the employers’ flexibility, Kind and Hulshof said.
“Very [few] modifications have been made to the SIMPLE IRA since it was first created,” Kind said. “On the one hand, this is a good thing, since we do not want to discourage small employers by constantly tinkering with the mechanics of the program, making it more costly to administer. On the other hand, after over 10 years of operation, I do think the SIMPLE IRA is ready for some modernization.”
Rep. Phil English, R-Pa., the highest ranking Republican on the subcommittee, said he is eager to learn more about SIMPLE IRA auto enrollment proposals.
“I believe this tool has the potential to fundamentally expand savings opportunities for millions of Americans and generate billions of dollars in new savings,” English said.
Barbara Bovbjerg, a director at the U.S. Government Accountability Office, testified that Congress needs to streamline oversight over SIMPLE IRAs if it wants to improve employee access.
Today, Bovbjerg said, the U.S. Labor Department and the Internal Revenue Service share responsibility for regulating employer-sponsored IRA programs.
This has resulted in the IRAs being overwhelmingly used to preserve savings through rollovers rather than as a means of building savings through contributions. Bovbjerg said.
Another problem the GAO has found is that employee access to payroll-deduction and employer-sponsored IRAs is limited, and a third problem is that the Labor Department does not believe it has jurisdiction over payroll-deduction IRAs, Bovbjerg said.
The GAO has suggested that Congress should consider whether payroll-deduction IRAs are in need of direct oversight, Bovbjerg said.
“A clear oversight structure could be critical if payroll-deduction IRAs become a more important means to provide a retirement savings vehicle for workers who otherwise lack an employer-sponsored retirement plan,” Bovbjerg said.