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Small Business Retirement Marketplace: Innovative Solution to Retirement Woes

The Washington Small Business Retirement Marketplace is offering a retirement solution for employers and employees.

Offering employee benefits is often a struggle for small business owners, but the State of Washington is leading the way with an innovative solution. The Washington Small Business Retirement Marketplace has created a simple retirement program for businesses with under 100 employees.

State leaders recognized a looming crisis with the baby boomer generation nearing retirement, especially among women, minorities, and low-income workers. In 2030, 20 percent of Washington residents will be retired. AARP research in 2013 found that almost half a million residents between 45 and 64 had less than $25,000 in savings. In addition, over 1.5 million Washington workers don't have access to retirement plans in the state—three-quarters of small employers don't provide them.

Participation in the Washington Small Business Retirement Marketplace is voluntary for both employers and employees. The state does not offer its own plans. Employers may use the marketplace to find a plan that suits their needs from a variety of pre-existing plan types such as a SIMPLE IRA, myRA, and others. There will be no cost for businesses to enroll and fees for employees are capped at 1 percent. Employers can choose, but are not required to, contribute an employee match where allowed (some plans like the myRA federal program don’t allow an employee match.) The plans will move with the employees, so if a new employer offers the program, they can roll it over at that workplace. They can also roll over their savings into another qualified retirement plan or IRA savings account if the new employer doesn't participate.

The state's next step is to identify financial services companies who want to belong to the Washington Small Business Retirement Marketplace. Participating companies must sign contracts agreeing to certain provisions, including fees. The selected retirement plans and options will be listed on a website so employers can compare plans and choose the one that is right for them and their employees.

The financial services firms will work directly with employees and manage their accounts. They will also assist companies in completing paperwork and reporting required.

According to AARP, about half of the remaining states are presently considering adopting Auto-IRA type programs. Since the cost to states is minimal and such programs boost savings, thereby reducing poverty among elders, Marketplace Programs seem like an idea whose time has come. Financial services firms gain additional enrollment, small businesses can provide a low-cost benefit to their employees, and workers benefit from a portable, easy-to-use retirement program.


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