SPARK Proposes Retirement Plan Alternative for Small Employers

March 15, 2010 ( - The SPARK Institute has released a detailed proposal for the Universal Small Employer Retirement Savings Program (USERSP).

Larry H. Goldbrum, General Counsel, pointed out in a news release that many employers, especially small companies, have been reluctant to adopt retirement plans for their employees due to concerns about the cost and potential fiduciary liabilities. “To address these issues and help increase the opportunity for all workers to be covered by a retirement plan, The SPARK Institute developed the USERSP proposal to provide small employers with a robust, simple, and cost effective employer-based retirement savings plan alternative to the plans that are currently available and to the proposed mandatory payroll deduction IRA,” he said.

According to the announcement, the key features of the USERSP, which may be offered by any employer with less than 100 employees, are:

  • Automatic Plan Features – Required mandatory enrollment and contribution features unless employees opt out.
  • Reasonable Contribution Limits – USERSPs would have lower contribution limits than 401(k) plans, but higher than IRAs so workers have reasonable opportunities to save enough for retirement.
  • Simplified Investment Option Selection and Fiduciary Exposure – Plan options would be required to meet specific minimum requirements for broad based investment choices to protect employers and service providers from potential fiduciary liability.  Investment options may be chosen by either the employer or determined by the service provider as part of its product offering.
  • Simplified Administration – The plans would not be subject to discrimination testing in order to reduce compliance burdens and costs.
  • Limited Plan Features to Prevent Savings Leakage – Loans would not be permitted and only safe-harbor hardship withdrawals would be allowed.
  • Simplified Plan Documents – USERSPs would use a government approved prototype plan document to reduce administrative and compliance costs.


Goldbrum noted that the USERSP would have to be created through Congressional action and certain aspects would require changes to certain existing laws and regulations.  “We are currently circulating the proposal to officials in the Obama administration, as well as lawmakers and the regulatory agencies that oversee retirement plans,” he said, in the announcement. 

The USERSP proposal was developed with the active participation and support of the membership of The SPARK Institute. The proposal is available on the Institute’s Web site at