A Look at Bush's One-Size-Fits-All Retirement Plan

Employers often have different 401(k) plans from their peers for a variety of reasons. Some may have beefier 401(k) plans because that's all they offer. Others may offer a pension plan or some other benefit in addition to the 401(k). Some may not offer anything at all.

"The jury's still out on ERSAs," says Frank McArdle, the manager of Hewitt Associates' Washington research office. "There's a lot of concern and consternation, particularly among small business groups."

One main concern is that as a result of the budget proposals, small businesses would be less likely -- rather than more so, as intended -- to offer retirement plans to their workers.

Small businesses, especially those with fewer than 25 or so employees, currently feel pressure to offer retirement plans, both for their owner's savings as well as the employees. But if the owners are able to save $15,000 a year outside of an employer plan (as they would in the LSAs and RSAs), they may be less inclined to contend with the administrative hassles of offering an ERSA.

"Many people are worried that if small business owners are able to save effectively outside of a company retirement plan, they will do so and avoid the red tape of offering an employer plan," McArdle says. "The workers would lose out; there wouldn't be as much incentive for them to save." While the workers would also be able to open their own LSAs and RSAs, they would lose the pretax salary deductions and employer match that most of these plans offer.

You Say ERSA, I Say ERISA

There's another aspect to all this simplifying that has some observers concerned: the elimination of some rules that are in place to make 401(k) plans more fair to lower-income participants and not a tax shelter for highly compensated employees.