S. 1840: Retirement Investment in Small Employers Act

The Retirement Investment in Small Employers Act proposes changes to the Internal Revenue Code to support small businesses, specifically those defined as "microemployers," in establishing pension plans for their employees. The key features of the bill include:

Microemployer Pension Plan Startup Credit

The bill introduces a new tax credit for qualified microemployers to help offset the costs associated with starting a pension plan. Here are the main points of this credit:

• A qualified microemployer can receive a tax credit equal to 100% of the startup costs of a pension plan, up from the previous limit of 50%.
• The maximum amount of the credit is increased to $2,500 from the previous limit of $500.
• To qualify as a "microemployer," a business must fit within certain eligibility requirements. Specifically, if the criteria used to define an eligible employer plan were adjusted to allow a business employing 10 or fewer employees, it would qualify.
• The pension plans established must allow for the payment of matching contributions.

Effective Date

The provisions of the bill would take effect for taxable years beginning after December 31, 2024.

Overall Goal

The overarching aim of the legislation is to encourage more small businesses to offer retirement savings plans, thereby enhancing the retirement security of their employees and contributing to a broader culture of retirement savings.

Relevant Companies

• None found