“401(k) plans were created about 20 years ago and since then there has been little or no regulation,” according to Representative Phil English (R-Pennsylvania). “We cannot allow hard-working Americans who have planned for retirement to wind up with nothing simply because they believed in their employer.”
In response, English has unveiled the Safeguarding America’s Retirement Act (SARA), which he says will:
- require companies to allow employees to make changes to their 401(k) at least four times a year,
allow employees to control investment of all of the money in the accounts – including employer matches – after the money has vested, or after three years, whichever comes first, and
- allow no more than 20% of a 401(k) to be invested in a single security. SARA would impose that restriction only on employee contributions and accruals until the 401(k) is fully vested – at which point the 20% limitation would apply to all assets in the employee account
English’s bill also fines employers up to $100,000 for violating the new protections, noting that plan administrators can also be fined up to $5,000 for a violation.
“My bill will protect workers from a situation similar to Enron,” English notes.