In January, the Bush administration proposed retirement reforms promising big changes for small business. But the sands shift quickly in Washington these days. The administration abandoned its retirement proposals less than a month after releasing them, citing the need to focus on job creation. A flurry of post-Enron pension bills are still making their way through Congress, however. Rep. John Boehner (R-OH) is cosponsoring a bill to allow employees who have been with a business for at least three years to sell the company stock in their 401(k) plans. Sen. Edward Kennedy (D-MA) is also sponsoring a retirement bill.
With all this legislative maneuvering, where are retirement plans headed? Rick Meigs, president of 401khelpcenter.com LLC, a Portland, Oregon, firm that follows trends affecting 401(k) plans, doesn't see any new retirement rules passing this year--and possibly not until 2005. In the near term, "you're not going to see any radical changes," he says. "The 401(k) plan will continue to be the retirement plan of choice." He also expects 401(k) plans to get cheaper as competition from providers seeking to capture the small-business market heats up.
Neither party has a lock on policy change, and the impact of any near-term changes will likely be very small, says Jane White, president of the Retirement Solutions Foundation, a nonpartisan organization in Madison, New Jersey, that educates the public about retirement savings. "Since 1978, there have been at least four attempts to make it easier for small business to offer plans," says White. "But statistics show the impetus for employers to start a pension is not government incentives, but whether the companies themselves are successful."