Guest Posted March 8, 2000 Posted March 8, 2000 Following are two sample letters to send to your representative regarding the issue of cross tested plans. One is for business owners, the second is for administrators. Our office works very closely with ASPA, and this is their suggested letter. contact me directly and I will e-mail the actual word document to you. Thanks for your help in this matter! March 12, 2000 The Honorable _________ Senator_________ The President U.S. House of Representatives U.S. Senate The White House Washington, DC 20515 Washington, DC 20510 Washington, DC 20500 Dear Representative (Senator or Mr. President) _____________, As a small business owner in your district, I am writing to express my outrage with the regulations affecting small business retirement plans currently being considered by the Department of the Treasury. It has taken years to build my small business into a successful enterprise. I am proud of the fact that my small business can afford to provide meaningful retirement benefits to its employees. However, if Treasury issues the regulations being considered, it will no longer be economically feasible to offer a retirement plan for the employees of my small business. Treasury has a history of interfering with my small business retirement plan. In 1994, Treasury attacked my small business retirement plan with a legislative proposal. Fortunately, Congress rejected that proposal on a bipartisan basis. Now, Treasury is attacking small business retirement plans again. But this time they are trying to go around Congress. These repeated attacks make it even more difficult for my small business to offer a retirement plan to its employees. I would like to continue to offer substantial retirement benefits to the employees who work for my small business. I hope you take action to stop Treasury from issuing regulations that will leave me with no choice but to terminate my small business retirement plan. Thank you for helping me to continue to offer retirement benefits to the employees of my small business. Sincerely, [small Business Owner(Principal)] .................... March 12, 2000 The Honorable _________ Senator________ The President U.S. House of Representatives U.S. Senate The White House Washington, DC 20515 Washington, DC 20510 Washington, DC 20500 Dear Representative(Senator or Mr. President) _____________, I am a retirement plan professional in your district that helps small businesses establish and maintain retirement plans for their employees. I am writing to express concern with regulations currently being considered by the Department of the Treasury. If Treasury issues these regulations, many small businesses in your district will terminate their retirement plans for their employees. Small business employees already have few opportunities to save adequately for retirement. Presently, only 20 percent of small business employees are covered by a retirement plan. This coverage gap is significant given that small business now employs over half of the nation’s private workforce. Treasury just announced that it is reviewing its nondiscrimination regulations and their application to “cross-testing” and “new comparability” methodologies. Since 1981, Treasury guidance has permitted qualified plans to satisfy nondiscrimination regulations by allowing these testing methodologies which compare the real value of contributions to a defined contribution plan at retirement taking into account the ages of the participants. In 1994, Treasury tried legislatively to repeal these methods. Fortunately, Congress rejected Treasury’s proposal on a bipartisan basis. Now Treasury is trying to accomplish by regulation what it could not achieve legislatively. Given the pressing need to expand small business retirement plan coverage, and the great complexity of this issue, great care must be taken to ensure that action by Treasury does not result in small business plan terminations. However, the notice issued by Treasury suggests that they will dramatically change the regulations affecting small business retirement plans. In fact, the approach suggested in the notice would clearly discriminate against small businesses merely because they have a small number of employees. I am asking you to stop Treasury from taking action on this issue. Many of these plans legitimately rely on “cross-tested” or “new comparability” plan designs, which have been permitted since 1981. Now, without any previous indication, Treasury has issued a notice indicating they are seriously considering changes to these rules and asking for comments in 75 days. If they rush to propose new regulations in this area, it could potentially lead small businesses to terminate their retirement plans leaving their employees with no retirement plan coverage. Thank you for helping small businesses to offer retirement benefits to their employees. Sincerely, [This message has been edited by Tom Poje (edited 03-09-2000).]
Lorraine Dorsa Posted March 8, 2000 Posted March 8, 2000 These letters can also be accessed on ASPA's website (www.aspa.org) and emailed directly to your senator/representative. ------------------
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