Pension Pennies
Will the tax reform increase small business's appetite for savings plans?
The sweeping $1.35 trillion tax bill President Bush signed into law includes measures designed to make retirement plans simpler for entrepreneurs to sponsor. The question is, Will the changes bring entrepreneurs flocking to the plans to help their employees?
The answer: not necessarily. Small-business owners, put off by prohibitive costs and complicated administrative tasks, have traditionally been far less likely than CEOs of larger companies to set up retirement plans. Rep. Ben Cardin (D-MD), who co-sponsored the House pension reform bill, estimated that among companies with fewer than 100 employees, as many as 80 percent of workers have no pension or retirement plan (compared to just 25 percent for large companies).
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