Bipartisan legislation introduced by U.S. Sen. Richard Burr (R-NC) on Thursday would take steps to make it easier and more feasible for small businesses to offer retirement programs to employees.
The Small Business Employee Retirement Savings Act, S. 3338, which was introduced by Burr and U.S. Sen. Michael Bennet (D-CO), would increase the retirement plan startup tax credit to $5,000, encourage automatic enrollment and reduce restrictions.
“I am proud to join Sen. Bennet in introducing this bipartisan legislation to help more small businesses offer retirement plan benefits to their employees,” Burr said. “This legislation gives small business employers better tools to empower employees when it comes to saving for retirement.”
Under current law, small businesses with fewer than 100 employees receive a tax credit that totals 50 percent or $500 of costs related to establishing a retirement plan, whichever is less. The Small Business Employee Retirement Savings Act would increase the credit from $500 to $5,000 to incentivize participation.
“More than 990,000 Coloradans work for a small business, yet small business owners often find it difficult to offer retirement plans to their employees,” Bennet said. “Our bill improves the tax incentives for small businesses to establish retirement plans and provides new incentives to help increase employee participation. This bipartisan proposal represents an important first step we can take to make it easier for Coloradans to save for retirement.”
Employers can currently auto-enroll employees in qualified plans and can gradually escalate employee contributions to 10 percent of wages over time. The bill would eliminate the 10 percent limit so that employees would be able to make larger contributions to retirement savings.