Clinton offers major pension changes.

President Bill Clinton's proposed Retirement Savings and Security Act has a number of provisions that could affect CPAs, especially those with small business clients. The act would simplify Internal Revenue Code section 401(k), increase the flexibility of individual retirement accounts and make pension plans more portable from job to job. Clinton's proposal is a collection of reforms, many of which have appeared in other forms throughout his administration. House Ways and Means Committee chair Bill Archer (R-Tex.) said that many aspects of the act had appeared in proposed Republican legislation vetoed by President Clinton.

Among the reforms is the "elimination of the limited-scope exemption for employee benefit plans that have assets held primarily by banks and insurance companies. Everything will have to be a 'normal full-scope audit;" said Randi L. Starr, chair of the AICPA employee benefit plans committee. She believes this will aid plan participants, who will be able to read the results of full audits as opposed to unhelpful disclaimers.

A provision that is "controversial-- perhaps more than it needs to be," according to Starr, is the rule that an auditor who comes across an "irregularity" must report it to the plan administrator, who then has five business days to report it to the secretary of labor. If the administrator does not, the auditor has one business day to notify the secretary. Starr said the controversy stems from confusion about when the clock starts running: If it's from the first time the auditor sees a piece of paper that ultimately becomes an irregularity problem, for example, it's too short a time period. However, she doubted the law would be interpreted that literally; the days would more likely be counted from the time the auditor becomes more sure there is an irregularity.

Robert J. Dema, chair of the AICPA employee benefits taxation committee, also listed the elimination of the limited-scope audit as a major change, along with three other aspects that would affect CPAs:

* Not-for-profit organizations would be able to offer 401 (k) plans to their employees.

* Simplified rules would make administering qualified plans easier.

* Employers with fewer than 100 employees would be able to offer a streamlined qualified plan. However, Dema thought such a plan would require employers to contribute more money than they may want to.

At Journal press time, the bill did not yet have a number or an official congressional sponsor.