U.S. Representative Ron Kind, D-Wisconsin—backed by Republican Representatives Mike Kelly of Pennsylvania and Jason Smith of Missouri—introduced the bipartisan Savings for All Vocations Enhancement (SAVE) Act.
The bill would expand access to savings by:
- Incentivizing owners of S corporations to convert to employee stock ownership plans (ESOPs);
- Making sure that an inadvertent mistake with a person’s individual retirement account (IRA) does not ruin the person’s retirement by rectifying penalties that IRA holders can face by bringing them in line with 401(k) penalties; and
- Allowing 403(b) plans to use open multiple employer plans (MEPs), which would allow 403(b) plans for workers from nonprofit organizations such as hospitals, school districts and churches to pool their retirement investments together.
The bill would encourage ESOPs by allowing for the deferral of tax for certain sales of employer stock to an ESOP sponsored by an S corporation. The legislation would also reduce excise taxes on certain accumulations in qualified retirement plans and on failures to take required minimum distributions (RMDs).
The Setting Every Community Up for Retirement Enhancement (SECURE) Act included provisions allowing for pooled employer plans (PEPs), but they only apply to 401(k)s, not 403(b)s.
“These are commonsense steps to make retirement savings as easy and understandable as possible for everyone, no matter what they do,” Kind said in a press release.
“By facilitating more ESOPs in private industry, Congressman Kind’s legislation will allow even more Americans to build meaningful retirement savings and reap the benefits of employee ownership,” said Employee-owned S Corporations of America (ESCA) President and CEO Stephanie Silverman.