Trump wants retirement saving rules expanded for small companies
(Bloomberg) – President Donald Trump plans to issue an executive order Friday directing his administration to make it easier for small businesses to band together to set up retirement-savings plans.
The order, to be signed in North Carolina ahead of the Labor Day weekend, is designed to cut some of the administrative burdens and costs that can prevent smaller employers from offering 401(k) plans for their workers, administration officials said on a Thursday conference call with reporters. Trump is asking the Labor and Treasury Departments to study the issue and offer new rules.
One area the Labor Department will look at, the officials said, is expanding criteria for so-called multiple employer plans. Currently they are limited to companies that share common characteristics, such as operating in the same industry, a requirement that could be changed so more firms could participate.
Among the regulations the Treasury will review are those governing minimum distributions retirees must take from their 401(k)s and IRAs, the officials said. Those may be lowered so that savers can keep more money invested for a longer time.
The review by Labor and the Treasury could take months, the officials said, adding that public comments would be solicited before new regulations are approved.
Multi-employer retirement plans allow small businesses to pool their resources -- which reduces costs and makes it easier to hire professionals to manage or consult on investments offered. Larger corporations are more able to absorb the costs or can spread them out across a much bigger number of workers.
"It has the potential to be a real positive for the retirement system," said Michael Kreps, a principal at the Groom Law Group in Washington.
The mutual fund industry has lobbied for years for regulatory changes that would make it easier for small businesses to offer 401(k)s and bring more savers into the retirement system. Legislation backed by both Republicans and Democrats is pending on Capitol Hill that would have a similar impact to the Trump directive. The officials, however, said the administration can enact many changes without Congress.
Trump has sought to eliminate some of the protections the Obama administration put in place for retirement savings, including a controversial rule that required brokers to put their client’s interest first.