Ohio looking to help workers save for retirement

Great news for all Ohioans. Soon you will have no excuse for not saving for retirement. The state governments are all starting to introduce bills to make small businesses give employees access to a state sponsored retirement plan of some kind.

Most of these bills are making businesses with 5 or more employees give access to the state plan. It will be in a pooled account with several investment options. These plans will have low fees. Most will require the employee to contribute 3 percent of their own money and they can opt out at any time.

On Oct. 2, 2013, State Senator Eric Kearney introduced this type of bill for Ohio. The state and the employers would not be liable for investment performance. The plan will be established if it is: self-sustaining, not subject to ERISA, and qualifies for favorable tax treatment. This is according to Pensionrights.org.

Will these be good for Ohioans? Should small businesses start their own plan now? There are a lot of factors to consider. Here are just a few: Can participants get their money out of the plan before age 65? If it’s not like Social Security, participants in this category probably will take excessive distributions. Can you imagine the service center for all the participants? Ohio or their contractor would have to hire thousands to staff it. What type of burden will it put on small business owners? They are already suffering from additional regulation. A huge consideration is how are participants going to get their advice on investment options? The Department of Labor already makes it almost impossible for us to give specific advice on these types of plans without becoming a “Fiduciary” on the plan. The DOL is still trying to come up with a game plan on acceptable ways of delivering financial advice to the participants.

If this plan will help a substantial amount of people save for retirement without putting too much burden on the average small business owner, I am all for it. Ohioans can go to any bank or financial advisor and start their own IRA for retirement right now.

I hope the state government works with the financial community and business owners to come up with a plan that will work for everybody.

Scott L. Webb is the owner of Webb Financial Group LLC and can be reached at scott.webb@lpl.com, 740-454-6113 or www.webbfinancialgroupllc.com.