The SPARK Institute has released the “Universal Small Employer Retirement Savings Program” report, in which it explains how universal plans would be less expensive and easier than automatic IRAs.

“We recognize that many employers, especially small companies, have been reluctant to adopt retirement plans for their employees due to concerns about the cost and potential fiduciary liabilities,” said Larry H. Goldbrum, general counsel of SPARK.

Features of the proposal include required mandatory enrollment and contribution features unless employees opt out, lower contribution limits than 401(k)s but higher than IRAs so that workers could save enough for retirement, and simplified investment option selection and fiduciary exposure. Either the employer or administrator can select the investment options for the plan.

Further, the plans would not be subject to discrimination testing in order to reduce compliance burdens and administrative costs. Loans would not be permitted and only safe-harbor hardship withdrawals would be allowed. SPARK also recommends simplified plan documents; the plans would use a government-approved prototype plan document, also to reduce administrative costs.

If these were to actually be used, Congress would have to pass a law creating universal plans, and certain existing laws and regulations at the Department of Labor and Internal Revenue Service would have to be altered.

“We are currently circulating the proposal to officials in the Obama administration, as well as lawmakers and the regulatory agencies that oversee retirement plans,” Goldbrum said.

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