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Author: W401K Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75833  
Subject: Re: President Proposes Replacing 401(k) Plans Date: 1/31/2003 11:45 PM
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I don't beleive this will reduce compliance costs a great deal. All it really does here is allow the Highly paids to put more money away because the Discrimination rules will be almost impossible to fail, and top heavy rules are being repealed. This should encourage more small business owners to start a plan, but I don't see all the recordkeepers out there lowering fees because some one will still have to draft a plan document specifiying eligibility for the plan, vesting schedules, Loan ammortizations, Revised discrimination tests, minimum coverage testing, Summary plan descriptions, IRS Form 5500s, process distributions, withhold and deposit tax, issue form 1099s, and Form 945s, Keep track of elective deferrals (402g limit and overall 415 limits)
These amendments do nothing to encourage lower paid workers to participate, just make it easier for the Highly paids to put more into the plan. Also the Safe harbor rules are relaxed which actually hurts the lower paid worker, current safe harbor match requirement is a formula equal to 4% of pay, new formula lowers the threshold th 3% on the safe harbor match.
Overall, should make things easier to understand, but don't expect huge cost savings because of this. I saw no mention of this repealig ERISA, DOL, or IRC regulations.
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