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 make the credit for small employer pension plan startup costs and the retirement auto-enrollment credit available to tax-exempt eligible small employers. This bill was introduced in the Senate by Mr. Lankford and Ms. Cortez Masto and referred to the Committee on Finance.
Expected Effects
If enacted, this act would allow tax-exempt small employers, particularly those described in section 501(c) and exempt from taxation under section 501(a), to access credits for pension plan startup costs and auto-enrollment. These credits would be applied against payroll taxes. The changes would apply to taxable years beginning after December 31, 2024.
Potential Benefits
- Increased retirement savings for employees of small nonprofits.
- Simplified retirement plan setup for eligible tax-exempt employers.
- Potential for greater employee retention at small nonprofits due to enhanced benefits.
- Encourages broader adoption of retirement plans among smaller organizations.
- May improve the financial security of nonprofit employees in retirement.
Potential Disadvantages
- Potential reduction in federal revenues due to increased credit usage.
- Increased complexity in tax code for small employers to navigate.
- Possible administrative burden for the IRS to implement and oversee the new credits.
- May disproportionately benefit larger nonprofits with existing payroll tax liabilities.
- The need for transfers from the general fund to cover revenue reductions.
Most Disadvantaged Areas:
Constitutional Alignment
The bill appears to align with the Constitution's general welfare clause (Preamble). It aims to promote the well-being of employees of small nonprofits by encouraging retirement savings. The bill's provisions related to taxation fall under the powers granted to Congress in Article I, Section 8, which allows Congress to lay and collect taxes, duties, imposts, and excises.
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).