ASPPA Wants relief for small businesses

 

Thursday, Mar 05,2009, 5:10:24 PM   Click:

Washington, DC - Stephen L. Dobrow, president of the American Society of Pension Professionals & Actuaries (ASPPA), the Congress said today that small businesses across the nation are in need of regulatory relief as they try to continue their 401 (k ) and defined benefit pension plans. In his testimony before the House committee on small business, gave Dobrow examples of small businesses having difficulty in providing employees with the means to prepare for retirement in this economy.

Dobrow is president of Primark benefits, an employee benefits company based in San Francisco, and small business itself, which provides record keeping, administration and actuarial services for pension plans. He told the committee that many small businesses that provide employees with retirement benefits are in need of relief from large pension funds requirements that resulted from the declining market. Other sponsoring safe harbor 401 (k) IRS need to enable them to suspend contributions, without ending the 401 (k) plan.

Dobrow said the committee members of many small businesses are struggling to stay afloat as sales fell and the owners struggling to obtain loans. "Small businesses are the heart of the U.S. economy. The owners want to do right by their employees and are not to ask for a bailout - a lifejacket to keep their heads above water during these troubling economic times, "said Dobrow. He cited two examples of customers stressed that small businesses face the tough economy and facing financial difficulties.

One is an importer of fruit with 15 employees. Because of the way the rules of retirement and a decline in market value of plan assets, the minimum contribution is increased from $ 177,000 in 2008 to $ 474,000 in 2009. It is not possible that the employer can not afford an increase of nearly $ 300,000. Emergency funds is required.

Another example is Cyclonix, a company in Silicon Valley, with 60 employees and does show work. Last year it contributed $ 69,000 to the company "safe harbor" and plan for 2009 is now required to contribute approximately $ 72,000 to the plan. Because its financial situation has changed, the company can no longer afford all the required contributions. Its owners are now to discontinue the company 401 (k) plan or possibly lay off some employees. A change in regulation, allows employers to suspend the "safe harbor" for future contributions, while protecting the rights of employees, allowing employers Cyclonix crucial and relief. ASPPA recommends that the federal government to provide a new safe harbor that would give more flexibility to employers to maintain pension plans for employees of the nation is facing economic uncertainty in the future.

ASPPA appeal to small businesses on both tracks - regulatory relief for the "safe harbor 401 (k) plans, and emergency funds for defined benefit plans. ASPPA requested that the 401 (k) safe harbor relief, in a letter last week to the U.S. Department of Treasury and the Internal Revenue Service.

ASPPA is a national organization of more than 6,500 pension plans to provide professional advice and administrative services for retirement plans covering millions of American workers. ASPPA members are retirement professionals of all disciplines including consultants, administrators, actuaries, accountants and lawyers. The broad membership gives an unusual insight into the current problems with the employee Retirement Income Security Act and qualified retirement plans with special emphasis on problems encountered by small and medium enterprises. ASPPA membership is diverse and united by a common commitment to the private pension system.

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Contact:

Chris Robichaux
crobichaux@asppa.org
P 703-516-9300