The limited role for government in easing the retirement-savings problem

The federal government has the right approach by revising existing rules rather than starting unnecessary new programs

By JAY MILLER | October 2019

Government can help ease the retirement-savings problem by making retirement plans more accessible to employers than they are today. That’s already happening at the federal level.

The U.S. Department of Labor just established a rule, which went into effect on Sept. 30, that allows unrelated employers, particularly small employers, to offer joint 401(k) plans. Indeed, unrelated employers in the same or similar business can band together no matter where they are located throughout the United States. Heretofore, none of this was permitted.

That’s encouraging for employers that on their own would shy away from offering a 401(k) plan for employees but may find it manageable when joining forces with other employers. Wisconsin’s Office of State Treasurer told the Badger Institute that the federal rule change is encouraging but cautions that more may be needed to solve the problem.

There is indeed more on the horizon. A bill is working its way through Congress — already passed by the House on a 419-3 vote — that would permit, among other things, more part-time workers to participate in 401(k) plans and further liberalize the rules for multiple employers to set up such plans. The lopsidedness of the House vote bodes well for its passage by the Senate before the end of the year.

In this case, the federal government has the right approach: Revise existing rules to make it easier for employers to provide a retirement plan for their employees rather than order a new government plan that needlessly overlays what the private sector already offers.

Jay Miller of Whitefish Bay is tax attorney and a visiting fellow at the Badger Institute.

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