SAVE Act Great for Small-Business Pre-Retirees

COLUMBUS, Ohio (TheStreet) -- Preparing for retirement is more complicated than ever, especially for the half of U.S. workers identified by the Employee Benefit Research Institute as not having access to a 401(k) plan through their employer. Many employees that don't have a 401(k) work for small businesses that have been unable to offer a plan due to factors such as low revenue, high plan set-up costs and the complexity of administering a plan.

A recent Nationwide Financial survey of small-business owners sheds additional light on the situation, finding that:

Half of U.S. workers don't have access to a 401(k) plan through their employers at small businesses.

• Three out of four small-business owners agree that the lack of retirement preparedness among America's workers has reached crisis levels.
• Only two in 10 offer a 401(k) or some other employee self-funded retirement plan.
• The major obstacles keeping small-business owners from offering retirement plans are high costs and the perception their business is too small to offer a plan.

In April, the Small Businesses Add Value for Employees Act was introduced before Congress, proposing legislation that would improve access to 401(k) plans for small-business employees. This legislation, sponsored by Reps. Ron Kind (D-Wis.) and David Reichert (R-Wash.), would allow small employers to reduce costs by pooling their resources under a single plan with easier administrative requirements.

The legislation would help American workers in several meaningful ways, including:

Improving access to retirement plans
The SAVE Act encourages small businesses that are not offering plans to pool together to offer Multiple Small Employer Plans. These plans are less expensive than single-employer plans and simplify an employer's administrative requirements. The survey found that a retirement plan that has the minimal amount of administrative requirements was the most important feature when selecting a plan for small-business owners, a feature supported by the SAVE Act legislation.

Enhancing fiduciary protection
By encouraging plan sponsors to work within the current defined-contribution system, this legislation extends to millions of Americans important fiduciary protections that do not exist with other retirement accounts. It also enables small businesses to easily transition to a traditional 401(k) retirement plan as the business matures.

The retirement savings crisis is one of the key issues facing our nation. It's important for retirement plan providers, plan sponsors and legislators to work together to develop practical solutions such as the SAVE Act to increase access to employer-sponsored retirement plans and help American workers prepare for and live in retirement.

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