New Universal Retirement Plan for Small Employers Proposed By The SPARK Institute As Alternative to Auto IRA

SIMSBURY, Conn., March 15 /PRNewswire/ -- The SPARK Institute released a detailed proposal today for a new "Universal Small Employer Retirement Savings Program" ("USERSP") to help solve the retirement savings gap for millions of American workers, it was announced by Larry H. Goldbrum, General Counsel.  "We recognize that many employers, especially small companies, have been reluctant to adopt retirement plans for their employees due to concerns about the cost and potential fiduciary liabilities," said Goldbrum.  "To address these issues and help increase the opportunity for all workers to be covered by a retirement plan, The SPARK Institute developed the USERSP proposal to provide small employers with a robust, simple, and cost effective employer-based retirement savings plan alternative to the plans that are currently available and to the proposed mandatory payroll deduction IRA."  The proposal is available on the Institute's web site at http://www.sparkinstitute.org/comments-and-materials.php.

Among the key features of the USERSP, which may be offered by any employer with less than 100 employees, are:

• Automatic Plan Features - Mandatory enrollment and contribution features.
• Reasonable Contribution Limits -  Lower contribution limits than 401(k)s, but higher than IRAs.
• Simplified Investment Option Selection and Fiduciary Exposure - Investment options would have to meet minimum requirements to protect employers and service providers from fiduciary liability.  
• Simplified Administration - The plans would not be subject to discrimination testing.
• Limited Plan Features to Prevent Savings Leakage - No loans and only safe-harbor hardship withdrawals.
• Simplified Plan Documents - USERSPs would use a government approved prototype plan document. Goldbrum noted that the USERSP would have to be created through Congressional action and some aspects would require changes to certain existing laws and regulations.    

The SPARK Institute represents the interests of a broad based cross section of retirement plan service providers and investment managers, including banks, mutual fund companies, insurance companies, third party administrators and benefits consultants.  Through the combined expertise of its member companies, the Institute provides research, education, testimony and comments on pending legislative and regulatory issues to members of Congress and relevant government agency officials. Collectively, its members serve over 62 million participants in 401(k) and other defined contribution plans.

SOURCE The SPARK Institute