Congress should consolidate and simplify the types of tax-favored retirement plans now available to small business owners to minimize the cost and administrative burden imposed by the plans, the American Institute of CPAs told Congress.
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“To determine which plan is right for their business, owners must consider their cash flow, projected profitability, anticipated growth of the work force, and expectations by their employees and co-owners,” Porter added. “The choices are overwhelming, and many are too complex or expensive for small business owners.”
He identified the following possible measures for simplifying the number and complexity of the various types of retirement plans:
• Create a uniform employee contributory deferral type plan.
• Eliminate the nondiscrimination tests based on employee pre-tax and Roth deferrals for 401(k) plans.
• Create a uniform rule regarding the determination of basis in distributions.
• Create a uniform rule of attribution.
• Create a uniform definition for terms to define owners.
• Eliminate the required minimum distribution rules.
• Create uniform rules for early withdrawal penalties.