Independent Retirement Fairness Act

Bill Number

S. 2217

Origin Chamber

Senate

Congress

119th Congress, Session 1

Policy Area

Labor and Employment

Status

Introduced

Latest Action

2025-07-09: Read twice and referred to the Committee on Health, Education, Labor, and Pensions.

Last Updated

2025-09-04T15:26:27Z

AI-Generated Summary

Purpose

The Independent Retirement Fairness Act (S. 2217) aims to expand access to retirement savings options for independent workers—such as freelancers or gig economy participants—who are not traditional employees. It amends the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986 (IRC) to allow these workers to join certain pension plans, simplify related administrative rules, and establish pilot programs to encourage savings.

Key Provisions

• Pooled Employer Plans for Independent Workers (Section 2):
• Treats independent workers as if they were employees for enrollment in pooled employer plans (shared retirement plans among multiple employers), making them eligible participants.
• Allows trade associations (e.g., labor organizations, worker cooperatives, or industry groups) to join these plans as if they were employers and enroll independent workers.
• Permits data sharing about independent workers between employers or trade groups and plan administrators to set up and maintain plans.
• Clarifies that joining such a plan or receiving contributions does not change the worker's independent status under federal, state, or local laws.
• Defines "independent worker" as someone paid for work but not classified as an employee, and "trade association" broadly to include worker groups or company associations.

• Simplified Employee Pensions (SEPs) for Independent Workers (Section 3):
• Allows employers to treat independent workers like employees for SEP-IRA purposes (a type of retirement account where employers contribute a percentage of pay).
• Gives employers options to exclude independent workers from coverage rules, treat them separately for contribution limits, or not count them toward plan size limits.
• Permits independent workers to direct cash bonuses into their SEP accounts instead of receiving them as cash, without affecting contribution percentages.
• Introduces "suspension accounts" where contributions can be held temporarily and either returned in cash or added to the SEP within the same tax year.
• Applies to tax years starting after enactment.

• Simplified Auditing for Groups of Plans (Section 4):
• Updates auditing rules from the 2019 SECURE Act to align group plan audits with those for pooled employer plans, using consistent accounting principles while respecting each plan's separate trust and asset limits.

• Simplified Auditing for Pooled Employer Plans (Section 5):
• Limits required audits to only the portions of a pooled plan tied to each participating employer, as if it were a standalone single-employer plan.
• Applies to plan years after enactment.

• Pilot Programs for the Gig Economy (Section 6):
• Directs the Treasury Secretary and Labor Secretary to create programs, based on research and consultations, to promote retirement savings.
• Program 1: Allows "rounding down" pay to the nearest dollar, with the extra cents automatically contributed to a pooled plan, solo 401(k) (a one-person retirement plan), or suspension account.
• Program 2: Enables automatic deductions from pay (e.g., per pay period or annually) for contributions to the same types of accounts, chosen by the worker.
• Coordinates with "safe harbor" plans (pre-approved retirement plans that meet IRS standards without extra testing).
• Defines suspension accounts as temporary holding spots for deposits, allowing withdrawals to fund other retirement options or annual lump-sum returns of unused amounts.

Significant Changes to Existing Law

• Expands ERISA's pooled employer plan rules (from the 2019 SECURE Act) to include non-employees, which previously limited participation to actual employer-employee relationships.
• Modifies IRC Section 408(k) on SEPs to accommodate independent workers, adding flexibility for bonuses, separate treatment, and suspension accounts—features not previously available.
• Streamlines auditing under ERISA Section 103 and the SECURE Act by narrowing scope to employer-specific portions, reducing administrative burdens on multi-employer setups.
• Introduces new pilot programs under Treasury and Labor authority, creating optional tools for automatic savings not found in prior law.

Potential Impacts

• On Citizens: Independent workers gain easier access to tax-advantaged retirement plans, potentially improving long-term financial security in the growing gig economy without altering their independent contractor status.
• On Government Agencies: The Departments of Treasury and Labor must develop and oversee pilot programs, review literature, and consult stakeholders, increasing short-term administrative workload but simplifying long-term plan oversight through audit changes.
• On International Relations: No direct impact, as the bill focuses on domestic U.S. tax and labor laws.

Main Stakeholders Affected

• Independent Workers: Primary beneficiaries, including gig workers, freelancers, and contractors, who can now save more easily for retirement.
• Employers and Trade Associations: Gain flexibility to include independent workers in plans without risking reclassification as employees; trade groups can sponsor plans for members.
• Pension Plan Providers and Administrators: Benefit from simplified audits and expanded enrollment, potentially increasing plan participation and revenue.
• Government Agencies: Treasury (handles tax aspects like SEPs and pilots) and Labor (oversees ERISA compliance) must implement changes.

Notable Legal, Constitutional, or Political Implications

• Legal: Reinforces independent contractor status by explicitly stating plan participation does not imply employment, helping avoid lawsuits over worker misclassification under laws like the Fair Labor Standards Act. Audit simplifications reduce compliance costs but maintain fiduciary protections under ERISA.
• Constitutional: No apparent challenges; aligns with Congress's authority over taxation (Article I, Section 8) and commerce regulation.
• Political: Addresses gig economy growth by promoting voluntary savings without mandating benefits, potentially appealing across party lines as a pro-worker measure, though it may spark debate on whether it sufficiently protects non-traditional workers from retirement gaps.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Cassidy, Bill [R-LA]

Recent Actions

• 2025-07-09: Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
• 2025-07-09: Introduced in Senate

Bill Versions

• Independent Retirement Fairness Act — issued 2025-07-09 — PDF (12 pages)