jar filled with coins

U.S. Sens. Susan Collins (R-ME) and Mark R. Warner (D-VA) on Wednesday introduced the SIMPLE Plan Modernization Act to provide greater flexibility and access to small businesses and their employees seeking to use the popular SIMPLE plans as an option for saving for retirement.  

Congress established SIMPLE (Savings Incentive Match Plan for Employees) retirement plans in the Small Business Job Protection Act of 1996 to encourage small businesses to provide their employees with retirement plans. Retirement plans among small employers continue to be scarcer than among medium and large employers. Although those smaller businesses have access to tax-favored retirement savings plans (including traditional 401[k]s), those plans are more expensive to administer, the senators noted.

Businesses with 100 or fewer employees currently may create SIMPLE retirement savings accounts for their employees, so long as the employers do not have another employer-sponsored retirement plan. THe proposed legislation, however, would increase the contribution limit for SIMPLE plans. Increasing the limit would help encourage more small business employers to offer a retirement savings benefit to their employees and allow small business employees to save even more each year on a tax-deferred basis.

“Even before the economic crisis caused by the COVID-19 pandemic, many Americans were having trouble saving for retirement. Now, there are even more financial challenges facing our workforce,” Warner said. “That’s why I’m proud to introduce this bipartisan legislation to make it easier for small business owners to support their employees in securing their financial future.”