Bipartisan Senate Retirement Reform Bill Introduced

A bipartisan group of moderate Democratic and Republican Senators has introduced S. 2190, the "Worker Investment and Retirement Education Act." Introduced by John Kerry (D-MA), Olympia Snowe (R-MA), Lincoln Chaffee (R-RI), and Dianne Feinstein (D-CA), the bill would require personalized investment statements for employees. In 401(k) plans and public company KSOPs or ESOPs that allow employee stock purchases, diversification is required as follows:

• Fifty percent of employer matching contributions of company stock could be diversified after three years of plan participation and 100% of all employer stock contributions after five years could be diversified. Public company stand-alone ESOPs are not affected by this portion of the bill.
• Half of non-matching employer stock contributions could be diversified after five years and 100% after seven years, including in covered ESOPs and 401(k) plans.
• All voluntary employee deferrals used to buy stock in any covered plan could be diversified at any time, except in stand-alone ESOPs. In that case, employees must be able to diversify at least half of the stock acquired with their deferrals after five years and 100% after seven.
• All stock can be diversified for workers over 55 in all covered plans.
• Employees cannot be compelled to invest in company stock, except in stand-alone ESOPs (subject to the diversification rules above).

The sponsors are members of the Senate Finance Committee, but the committee is more likely to consider a bipartisan bill now being worked on by Max Baucus (D-MT) and Charles Grassley (R-IA), the chair and ranking Republican.