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Delegate William Frick is sponsor of a bill that would incentivize businesses to offer a qualified retirement plan to employees by waiving filing fees for seven different reports required by the state. (The Daily Record file)

Md. lawmakers consider retirement plan without mandates, penalties

ANNAPOLIS — Legislation to require businesses to offer retirement plans to employees or push them into a state-managed plan will not be as wide-sweeping as once thought.

Sen. Douglas J.J. Peters is sponsor of a bill that would incentivize businesses to offer a qualified retirement plan to employees by waiving filing fees  for seven different reports required by the state.

Sen. Douglas J.J. Peters is sponsor of a bill that would incentivize businesses to offer a qualified retirement plan to employees by waiving filing fees for seven different reports required by the state.

Sen. Douglas J.J. Peters, D-Prince George’s County, said questions about how new federal regulations may affect the proposal have raised strong concerns about whether the state could become liable for losses in a state-managed plan. Peters, the owner of a data storage company that employs about 10 people, said he plans to introduce an amendment to his own bill that would strike the state-managed plan and substitute a study conducted by a state panel that one day could morph into a board that could manage such a plan.

“This is very much a slimmed-down version of the bill,” said Peters, comparing it to previous versions introduced over the last decade that sought to require small businesses with 10 or more employees to offer a qualified retirement plan or place them in a state-run plan managed separately but similarly to the pension system for state employees.

Peters said the bill would incentivize businesses to offer a qualified retirement plan to employees by waiving filing fees for seven different reports required by the state. Employers would be required to prove they provide an automatic enrollment payroll deduction retirement account or an employer-sponsored plan that is in compliance with federal law.

There would be no mandate and no penalty for not complying.

“If you’re a business owner, your penalty is that you continue to pay the same $300 filing fee you’ve been paying,” Peters said.

Last year, the U.S Department of Labor proposed regulations creating a so-called safe harbor for state governments who set up such a plan. The intent was to indemnify state governments from any liability should retirement investments not live up to expectations.

Peters said the board would be tasked with studying the issue further and re-evaluating the law based on how the federal regulations are implemented.

Peters’ bill, as well as an identical bill sponsored in the House of Delegates by Del. C. William “Bill” Frick, D-Montgomery, currently contain provisions to set up such a board.

“I think it will ensure no one is left without easy access to retirement saving through payroll deduction,” Frick said.  “That’s my priority.”

Frick did not answer questions about whether he would amend his bill similarly to Peters’ version.

This is not the first time the legislature has taken up such a proposal. In fact, the General Assembly has attempted to pass some form of retirement mandate on businesses over the last decade.

This year, Busch and Miller have made it part of their legislative priorities.

Senate Bill 1007 and the identical House Bill 1378 are nearly the same as legislation proposed in each of the last two years by Sen. James C. Rosapepe, D-Prince George’s and Anne Arundel Counties.

A hearing has been scheduled for March 15 in the House Economic Matters Committee. The Senate Budget and Taxation Committee has yet to schedule a hearing on the cross-filed version.

Key differences this year include the waiver of some required filing fees ranging between $100-$300 annually and the elimination of the previously proposed financial penalty of $250 per employee for employers who do not participate.

For opponents, the incentives and lack of penalties are improvements over previous attempts.

“If the state wants to waive filing fees just because an employer starts up a plan for their employees, if I own a business that sounds pretty good,” said Sen. Andrew A. Serafini, R-Washington County.

But Serafini said he is still concerned about the state’s liability.

Serafini said he will propose an amendment to strip out the state-managed plan, leaving only the portion requiring employers to offer a qualifying retirement plan.

“There are just too many questions out there still,” Serafini said. “Why has California been looking at this for years and they’re still not there?”

Peters agreed that concerns about violating the federal law affected the bill.

“Absolutely,” Peters said. “That’s why we are being very careful to use the most basic of basic of steps so as not to run aground of that.”