Small Nonprofit Retirement Security Act of 2025
Summary
The Small Nonprofit Retirement Security Act of 2025 aims to amend the Internal Revenue Code of 1986. It seeks to extend the credit for small employer pension plan startup costs and the retirement auto-enrollment credit to tax-exempt eligible small employers.
This bill focuses on organizations described in section 501(c) and exempt from taxation under section 501(a). The credits would be applied against payroll taxes.
The Act also appropriates funds to the Federal Old-Age and Survivors Trust Fund and the Federal Disability Insurance Trust Fund to offset revenue reductions resulting from these amendments.
Expected Effects
The likely effect of this bill is to increase the number of small, tax-exempt organizations that offer retirement plans to their employees. This is achieved by making pension plan startup and auto-enrollment credits accessible.
This could lead to greater retirement security for employees of these organizations. It also requires adjustments to existing payroll tax credit mechanisms.
Potential Benefits
- Increased retirement savings opportunities for employees of small nonprofits.
- Potential for improved employee retention and attraction for these organizations.
- Simplification of retirement plan adoption through auto-enrollment.
- Financial relief for small nonprofits through tax credits.
- Boost to the overall economy through increased investment in retirement funds.
Potential Disadvantages
- Potential strain on the federal budget due to increased tax credits.
- Complexity in administering the new credit system.
- Possible unintended consequences related to payroll tax calculations.
- Risk that some organizations may not fully utilize the credits.
- The need for ongoing monitoring to ensure effectiveness and prevent abuse.
Constitutional Alignment
This bill appears to align with the general welfare clause of the US Constitution, as it aims to improve the financial security of individuals working for small nonprofits. The appropriations outlined in the bill fall under the purview of Congress's power to collect taxes and provide for the general welfare, as described in Article I, Section 8.
However, the specific mechanisms for implementing the tax credits and transferring funds to trust funds would need to be carefully scrutinized to ensure compliance with other constitutional provisions related to taxation and spending.
There are no apparent conflicts with individual rights or freedoms guaranteed by the Bill of Rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).