Congress Gains Momentum on Retirement Plan Tax Credits for Small Employers
“New Bill Introduced to Increase Start-Up Tax Credits for Small Businesses Offering Retirement Plans”
The Retirement Investment in Small Employers Act, introduced by Senators Maggie Hasan and Ted Budd, aims to increase start-up tax credits for small businesses with nine or fewer employees offering retirement plans. This bill, if passed, would raise the minimum tax credit available to employers with between one and nine employees to $2,500 from $500.
The bill seeks to update provisions found in the Setting Every Community Up for Retirement Enhancement Act of 2019 and the SECURE 2.0 Act of 2022. Specifically, it addresses the limitations of the SECURE 2.0 Act, which did not amend the tax credit structure found in SECURE 1.0, limiting the startup credit to $250 per employee with a minimum of $500.
By increasing the minimum benefit to $2,500 regardless of the number of employees, the RISE Act provides added incentives for small businesses to offer retirement plans. Additionally, the bill offers a tax credit to incentivize employer contributions to defined contribution plans, providing a credit of 100% of employer contributions for the first two years of the plan.
Overall, the Retirement Investment in Small Employers Act aims to support small businesses in providing retirement benefits to their employees and encourage greater participation in retirement savings. This legislation could have a significant impact on the retirement planning landscape for small businesses across the country.
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