Congress always has proposed legislation that will never make it to law and this thrift savings plan idea is one that is just an awful idea. Senator John Hickenlooper (D-Colo.), a sponsor of a controversial bill to create a Thrift Savings-like plan for private sector workers, said he’d reduce 401(k) savings to pay for the legislation. Hickenlooper has proposed the Retirement Savings for Americans Act (RSAA) and he said that he would lower 401(k) tax incentives and contribution limits to pay for the program. Supporters of RSAA say it would help low- and middle-income Americans build wealth and save for retirement. RSAA would require the federal government to pay matching contributions for workers, but only those who participate in the plan. The proposed 5% match under RSAA would encourage plan sponsors to terminate their 401(k) in favor of the federal plan. Plus based on Social Security, the Federal government doesn’t have a great scorecard for retirement savings.

As they once said in This is Spinal Tap, there is a fine line between stupid and clever. I can assure you that Michael McKeon who played David St. Hubbins in the movie and co-wrote it, was not in plan administration. Based on what I’ve seen when it comes to plan document drafting, the line fits just based on what I’ve seen.

The fine line between stupid and clever is plan provisions that are outside the box of normal administration. Complex provisions on eligibility, compensation, and vesting will lead to more errors than provisions that are in the normal realm of plan administration. For example, eliminating forms of compensation for purposes of an employer contribution or salary deferrals leads to many errors, as well as unique eligibility provisions and entry dates.

There are so many normal choices for plan provisions, yet being unique and creative when it comes to plan document preparation isn’t a great feature. As I always say: keep it simple, stupid. Unique plan parameters lead to more errors and some errors will cost you to fix. Creativity isn’t a great trait when it comes to planning provisions.