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News Release

Labor Department Testifies On Initiatives Encouraging Employers To Offer Retirement Savin

Archived News Release — Caution: Information may be out of date.

Leslie B. Kramerich, the Deputy Assistant Secretary of Labor for the Pension and Welfare Benefits Administration, today testified before the Senate Special Committee on Aging on the agency’s efforts to expand retirement coverage and promote retirement savings for all Americans.

Kramerich pointed out that “individuals face a multitude of decisions about saving on their own for retirement. Therefore, our challenge is to provide more information to help educate them on ways to save and invest for retirement. As part of our Retirement Savings Education Campaign, we are committed to assuring that all citizens — including youth, minorities and women — have access to information with which to make informed decisions.”

In her testimony, she focused on several Administration initiatives to strengthen, simplify and expand pension coverage. These included initiatives to create a simplified defined benefit pension plan known as the Secure Money Annuity or Retirement Trust, to provide increased portability of pension rights when employees change jobs, and to provide new tax credits to employers, particularly small employers, as an incentive to start retirement plans for their employees.

In addition, she announced the publication of an interpretive bulletin clarifying how employers can make it easier for employees to save for retirement on their own through payroll deduction contributions to individual retirement savings accounts (IRAs).

The bulletin is intended to encourage employers who are not ready to sponsor corporate pension plans to help their employees save for retirement. The bulletin focuses on employers creating automatic payroll deduction systems that employees can use to make their own contributions to individual IRAs. The bulletin collects and restates existing guidance the department has issued over the years on what employers can do without actually creating a pension plan subject to the requirements of federal pension law.

“Our new guidance provides additional encouragement to employers, especially small employers, to offer their workers an opportunity to put aside tax-deferred savings for their retirement,” said Kramerich. “And, it furthers this Administration’s ongoing commitment to broaden pension coverage by expanding opportunities for employers to create retirement savings vehicles for their employees.”

In the past, the department has issued a number of advisory opinions to address the treatment of IRAs under the Employee Retirement Income Security Act. These advisory opinions have served as individual guidance to members of the employer community. The interpretive bulletin collects, codifies and summarizes that earlier guidance.

Under the proposed interpretive bulletin, employers that offer payroll deduction for IRA contributions would not be considered to have created or to maintain a pension plan subject to ERISA as long as they limit their involvement with the IRA programs. For example, employers may:

— display the corporate name or logo on material giving information about the payroll deduction system;

— pay the administrative cost of operating the payroll deduction system; or

— limit the number of investment vehicles to which employee contributions will be forwarded through the payroll deduction system.

The interpretive bulletin is scheduled to be published in the June 17 Federal Register and will be available through the website of the department’s Pension and Welfare Benefits Administration at

U.S. Department of Labor news releases are accessible on the Internet. The information in this news release will be made available in alternate format upon request (large print, Braille, audio tape or disc) from the Central Office for Assistive Services and Technology. Please specify which news release when placing your request. Call 202.693.7773 or TTY 202.693.7755.

Archived News Release — Caution: Information may be out of date.

Contact Name: Gloria Della
Phone Number: 202.219.8921

Employee Benefits Security Administration
June 17, 1999
Release Number