LPL Financial has come out in support of Congressional bills that would provide tax credits for small businesses that opt for automatic enrollment and matching contributions within their employees’ 401(k) plans.
Sens. Rob Portman, R-Ohio, and Ben Cardin, D-Md., introduced the Retirement Security and Savings Act in May 2019. One of the provisions of the bill aims to help employers make matching contributions to employees’ retirement accounts by establishing an automatic enrollment safe harbor for employers to meet non-discrimination requirements.
“Cost and complexity are two of the main reasons why small businesses do not provide retirement plans to their employees,” Peggy Ho, LPL executive vice president and head of government relations, says in a statement. “With insight from our financial advisors who serve small business owners every day, we are working to support legislation that enables access to retirement plan savings for small business employees.”
LPL points to a survey of its financial advisors who offer retirement planning services to small businesses which found that 89% believe the proposed tax credit would boost the likelihood of a small businesses setting up automatic enrollment and automatic escalation for their work retirement plan.
“I’m pleased to have the support of LPL for our work to encourage auto enrollment in the bipartisan Retirement Security and Savings Act,” Portman says in a statement. “We know from behavioral economics and practitioner data alike that incentivizing automatic enrollment has a truly impactful effect on encouraging more retirement savings and coverage. Section 101 of Portman-Cardin rewards small businesses willing to ensure their employees set aside significant savings for their retirement while offering a generous employer match, and sets a bold new standard that all of us — employers, participants, investment managers, and lawmakers — can aspire towards.”
The proposal follows a 2017 bill from Rep. Richard Neal, D-Mass., then chairman of the House Ways and Committee, which introduced the Automatic Retirement Plan Act and Retirement Plan Simplification and Enhancement Act. Those bills aimed at requiring many employers to offer a 401(k) or 403(b) plan, and at exempting retirement savings below $250,000 from what he says are complicated required minimum distribution rules, respectively.
Neal plans to introduce the bills again this legislative session.
A spokewoman for LPL says that the firm does not publicly disclose the number of retirement-plan specialist advisors it has in its network, or the number of plans advised.