DOL proposes rule for pooled small business retirement plans

DOL proposes rule for pooled small business retirement plans
© Greg Nash

The Department of Labor on Monday proposed a new rule to allow small businesses to pool together to offer workers retirement plans.  

The rule, if approved following a comment period, would pave the way for business associations to operate association retirement plans (ARPs), allowing a group of businesses to share administrative and oversight costs.

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"Many small businesses would like to offer retirement benefits to their employees, but are discouraged by the cost and complexity of running their own plans," said Labor Secretary Alexander AcostaAlex Alexander AcostaThe Hill's Morning Report — Presented by National Association of Manufacturers — Whistleblower complaint roils Washington On The Money: Senate confirms Scalia as Labor chief | Bill with B in wall funding advanced over Democrats' objections | Lawyers reach deal to delay enforcement of NY tax return subpoena Sanders calls Eugene Scalia's Labor Dept. confirmation 'obscene' MORE. "Association Retirement Plans give these employers a simple and less burdensome way to offer valuable retirement benefits to their employees."

The rule would also allow sole proprietors to join into ARPs, which could also be sponsored by Professional Employer Organizations.

According to the Department of Labor, nearly 38 million private-sector workers are not offered employer-based retirement plans.

The rule comes less than two months after President TrumpDonald John TrumpDemocratic senator rips Trump's 'let them fight' remarks: 'Enough is enough' Warren warns Facebook may help reelect Trump 'and profit off of it' Trump touts Turkey cease-fire: 'Sometimes you have to let them fight' MORE signed an executive order instructing the Department of Labor to look into the plan.

Business groups welcomed the proposed rule.

“This proposal will expand retirement savings opportunities for millions of small business employees," said Aliya Wong, who heads up retirement issues at the U.S. Chamber of Commerce.

The rule, Wong added, would help small businesses compete with larger employers in offering benefits.