Independent Retirement Fairness Act

This plan aims to help gig workers and other independent workers save for retirement. It lets them join large, pooled 401(k)-style plans run by plan providers or trade groups, without changing their worker status to “employee.” Companies and trade groups can share needed data to set up and run these plans, but being in a plan does not turn a contractor into an employee under any law . The plan also launches pilots to make saving easier, like rounding down pay and sending the spare change to savings, or setting automatic contributions on a schedule to a pooled plan, a solo 401(k), or a temporary “suspension account” that can hold funds before they are returned or deposited later that year .

It updates SEP IRA rules so employers can choose to treat independent workers like employees for contributions, keep them in a separate group for certain limits, and let workers put their cash bonuses straight into their SEP instead of getting them in cash. Money can go to a suspension account first, then be returned or contributed within the same tax year without penalty. These SEP changes apply to tax years after the law takes effect. It also simplifies audits for pooled and grouped retirement plans by focusing audits on each employer’s share, starting with plan years after enactment .

Key points

• Who is affected: Independent and gig workers; employers, plan providers, and trade groups that offer retirement plans .
• What changes:
  • Independent workers can join pooled employer plans without changing their legal status as non-employees .
  • SEP IRAs can include independent workers; bonuses can go directly into the SEP; temporary “suspension accounts” allowed within the same tax year .
  • Pilot programs for easy saving (round-down and auto-deduction options) to pooled plans, solo 401(k)s, or suspension accounts; may use safe harbor plans .
  • Audits for pooled/group plans are simplified and limited to each employer’s portion .
• When:
  • SEP IRA changes apply to tax years after enactment; audit changes apply to plan years after enactment; pilot programs begin after agencies set them up .