A federal rule that takes effect Monday allows certain trade groups and employer organizations to sponsor a 401(k) plan that members can participate in and offer to their employees.
The rule, issued in July by the Labor Department and effective Monday, aims to expand the use of so-called multiple-employer plans.
Companies in different industries can band together to offer their workers a retirement plan through certain organizations, as long as they are located in the same geographical area.If your employer doesn't offer a retirement plan, a new option might change that. A federal rule now in effect allows companies to team up through certain employer groups and professional organizations to offer a shared 401 plan to their workers. The rule, which aims to expand the use of so-called multiple-employer plans, comes as a similar — but broader — proposal continues to"Both go to the same issue, which is how do we get plans to more workers," said Bradford Campbell, a partner in the Washington, D.C.
Small-business owners have cited cost and administrative headaches as reasons they don't offer retirement plans of their own to their workers. The new Labor Department rule aims to reduce those issues by making regulatory changes to allow local or state associations of employers — i.e., chambers of commerce — to sponsor a 401 plan that members can offer to their employees. Companies located far apart that want to band together would need to be in the same industry.
In addition to being offered through employer associations, these plans could also be offered through specific firms that handle human resources tasks for their business clients.
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