Rep. Tenney (R-NY) and Rep. Kildee (D-MI) introduce legislation incentivizing businesses with 1-9 employees to adopt retirement plans

Rep. Claudia Tenney (R-NY) and Rep. Dan Kildee (D-MI) have introduced H.R. 6007 – the Retirement Investment in Small Employers (RISE) Act – bipartisan legislation that would allow micro-sized businesses with 1-9 employees to realize full retirement plan startup tax credits and benefits originally offered in SECURE Act 2.0. Paychex, Inc., the largest 401(k) recordkeeper in the U.S. by total number of plans, supports the passage of this legislation, which would help smaller businesses receive incentives similar to those that larger businesses currently receive. Today, the typical costs for employers with fewer than 10 employees to establish a defined contribution plan are higher than the startup tax credits available to those businesses under existing law.

The RISE Act from Rep. Claudia Tenney (R-NY) and Rep. Dan Kildee (D-MI) would increase the minimum allowable tax credit from $500 to $2,500 and, as an incentive to encourage low-income workers to save for retirement, the legislation would require employers to offer the Saver’s Match to their employees to receive the tax credit. This would offer employees of micro-sized businesses similar retirement savings opportunities as larger businesses.

“All businesses, regardless of size, deserve the same opportunity and access to tax credits to help offset the costs of offering a retirement plan to their employees,” said Michael Majors, Paychex vice president of HR Solutions. “Paychex is proud to endorse the RISE Act to expand tax credits for micro-sized businesses, which provides a clearer pathway for more of the smallest businesses to offer retirement plans and helps to solve the country’s retirement crisis.”

“Congress must empower and reaffirm our commitment to small businesses across the country by taking steps to grant them a competitive edge in our economy,” said Congresswoman Tenney. “I introduced the Retirement Investment in Small Employers Act, along with Congressman Kildee, to enable micro-businesses across NY-24 and the nation to offer their employees robust retirement plans and allow their employees to save for the future. I remain committed to advocating for tax policies that work in favor of our small businesses and hardworking families.”

“In mid-Michigan, small businesses support thousands of good-paying jobs and fuel our local economy,” said Congressman Kildee. “I am proud to work to introduce legislation with Congresswoman Tenney to help more employers set up retirement plans, ensuring more Michigan workers can save for retirement. This bipartisan bill is a win for small business owners and workers alike.”

Upon its original passage in 2019, the SECURE Act became the most significant retirement legislation in nearly 15 years. Among its many provisions were a series of tax credits aimed at encouraging retirement plan establishment for small and medium-sized businesses. For employers with 100 or fewer employees, the 50% credit for plan startup costs was a minimum of the greater of $500 or $250 per non-highly compensated employee eligible for the plan, capped at $5,000.

Lawmakers enacted SECURE Act 2.0 in 2022, enhancing the startup tax credit by allowing 100% of retirement plan set-up and administrative costs to be claimed for new plans, up to $5,000 per year. SECURE 2.0 did not amend the per-employee formula to calculate the amount an employer can claim in retirement plan start-up credits – a key change in the proposed legislation. Rep. Tenney (R-NY) and Rep. Kildee (D-MI) are advocating for an increase in the minimum allowable startup tax credit to ensure that micro-sized businesses can fully benefit from the tax incentives granted to small businesses under SECURE Act 2.0.

In 2024, Congress is expected to consider technical corrections to SECURE Act 2.0. It is anticipated that the RISE Act may be considered, as well.

About Paychex

Paychex, Inc. (Nasdaq: PAYX) is an industry-leading HCM company delivering a full suite of technology and advisory services in human resources, employee benefit solutions, insurance, and payroll. The company serves approximately 740,000 customers in the U.S. and Europe and pays one out of every 12 American private sector employees. The more than 16,000 people at Paychex are committed to helping businesses succeed and building thriving communities where they work and live. Visit paychex.com to learn more.

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