Small Businesses Concerned About Possible Retirement Savings Legislation

Small businesses are increasingly concerned about the inadequacy of retirement savings for many Americans and possible government responses, according to a provider of payroll services.

Small firms represent 99.7% of all employer firms and employ half of all private-sector employees in the U.S., according to the Small Business Administration, making the concerns of small-business owners especially significant for the election.

The regulatory team at Paychex Inc. found that among election-year issues that concern small-business owners and entrepreneurs, the possibility that employers may have to deal with a mandated solution, such as an auto-enrollment IRA, looms large.

Because of the amount of talk about getting people to save, the possible shortfalls in Social Security payments, some people think some kind of payroll deduction might be needed, said Mike Trabold, senior manager of compliance risk at Paychex.

“Everyone we talk to is very sensitive to the fact that Americans aren’t saving enough,” Trabold told PLANADVISER.

Auto-enrollment is certainly gaining increased awareness, he said, and asked, “How would a mandated payroll deduction affect a small business? What would be the responsibility for a small-business owner?”

According to Trabold, small businesses are also interested in making it easier to form and maintain multiemployer plans; making electronic disclosure easier; and sensitive to possible burdens from auto-IRA.

Another likely election subject will be the degree of existing and proposed regulations facing small businesses and striking the right balance between business and consumer priorities. The existence of a business-friendly environment, also referred to as freedom from undue regulatory burden, is usually seen as a primary factor in a small-business owner’s appetite for expanding or investing in his or her business.

The election-year list was compiled by the regulatory team at Paychex, which works closely with the IRS and other government agencies to monitor legislative and regulatory issues that have an impact on the company’s 564,000 clients across the country.

More about these and other regulatory issues Paychex follows is available here.