Senate Advances Small Business Retirement Legislation Sponsored by Senators Burr and Bennet
WASHINGTON — Today, the Senate Finance Committee passed bipartisan legislation sponsored by Senators Richard Burr (R-NC) and Michael Bennet (D-CO) to make it easier for small businesses to set up retirement programs for employees.
The Small Business Employee Retirement Savings Act increases the retirement plan start up tax credit to $5,000, incentivizes auto enrollment, and removes restrictions to increase employee participation in retirement plans. This bill was included as a part of the Retirement Enhancement and Savings Act, passed today by the Finance Committee.
“Passing this bipartisan legislation out of committee is good step towards helping more small businesses offer retirement plan benefits to their employees,” said Senator Burr. “I’m proud to work with Senator Bennet on this issue, and I’m hoping my colleagues pass this legislation as soon as possible so we can give small business employers better tools to empower employees when it comes to saving for retirement.”
“This bipartisan bill is an important first step toward helping more Coloradans save for retirement,” Senator Bennet said. “With new tax incentives and less red tape, small business owners will be able to set up retirement plans and increase employee participation. Senator Burr and I will continue to push for its passage by the full Senate.”
The Small Business Employee Retirement Savings Act includes three key provisions that make is easier for employees of small businesses to prepare for retirement:
Increasing the Size of the Start Up Credit – Currently, small businesses (with less than 100 employees) receive a tax credit totaling 50% of the costs of establishing a new retirement plan or $500—whichever is less. The credit can be taken for three years and can be used to offset the costs for starting up a new 401(k) plan, a SIMPLE retirement plan, or a simplified employee pension (SEP). The bill would increase the credit from $500 to $5,000.
Creating a Credit for New Plans that Offer Auto Enrollment – The bill creates a new $500 per year tax credit (for up to three years) for small businesses that offer new retirement plans that include auto enrollment. It would also apply to businesses that add auto enrollment to an existing retirement plan.
Eliminating the 10% Auto Enrollment Limit – Currently, an employer can auto enroll an employee in a qualified plan and over time, can escalate the employee contribution to 10% of their wages. This bill would eliminate the 10% limit, allowing employees to make larger contributions to retirement savings.
Today, the Senate Finance Committee also advanced the Volunteer Responder Incentive Protection Act, legislation co-sponsored by Senator Burr to assist fire departments recruit and retain volunteer firefighters and emergency medical responders.
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