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February 26, 2020

Relaxed federal rules spur new retirement offering at Southington chamber

The Southington Chamber of Commerce says it’s the first chamber in New England to take advantage of a recent federal change that’s made it easier for groups of unrelated employers to share the cost of administering a 401(k) retirement plan.

A U.S. Department of Labor rule change that took effect last September has paved the way for an increase in so-called association retirement plans, which are also referred to as multiple employer plans.

Such plans allow a single retirement plan to cover the employees of multiple employers.
DOL said the rule change is aimed at reducing costs and increasing access to workplace retirement plans for small business workers and the self-employed. The agency said chambers of commerce could be particularly well-suited to sponsor such plans.

The offering could help boost membership for the Southington chamber, which reports 300 members. The plan launch was led by Chamber President Barbara Coleman-Hekeler and Brian D. Williams of Northshire Consulting, which will manage the plan.

Prior guidance from DOL required companies participating in the plan to be sufficiently similar (such as being members of the same industry), DOL said. The new rule allows plans based on common geography.

The plans are a cousin of the more controversial “association health plans,” which remain restricted in Connecticut, following a federal rule change by the Trump administration aimed at increasing their numbers.

Across the country, more than 4,000 association retirement plans formed and covered more than 4 million people as of 2016, under the prior rules, but that number is expected to increase.

The new option arrives after the state bungled the rollout of a retirement plan option for the estimated 600,000 state residents who don’t have access to a workplace-sponsored plan.

The state legislature sought to ameliorate the situation by creating a publicly funded Retirement Security Authority to offer a retirement plan option. However, late last year the authority suspended expenditures and soon after moved to lay off its executive director, the Hartford Courant reported.

Gov. Ned Lamont has proposed moving the authority to the State Comptroller’s office and providing funding for clerical support, CT News Junkie reported.

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