RISE Act
Starting in January 2027, this bill increases federal financial support for very small businesses with 10 or fewer employees that set up retirement plans for their workers. Eligible companies can receive a tax credit covering 100% of their startup costs—up to $2,500 annually—instead of the current 50% match. Additionally, small businesses can authorize their retirement plan providers to claim this tax credit directly, immediately reducing the upfront fees the business has to pay to launch the retirement plan.
- Referred to the House Committee on Ways and Means.
- Introduced in House
- Introduced in House
The provisions, in plain language.
Starting in 2027, employers with 10 or fewer employees that establish a retirement plan accepting federal Saver's Match contributions can claim a tax credit covering 100% of their plan startup costs (up from 50%), up to a maximum of $2,500 per year (up from $500).
Starting in 2027, financial institutions or businesses providing retirement plan setup services can claim a federal tax credit for up to three years if they lower the small employer's startup fees by the amount of the credit, provided the employer certifies they will not claim the startup credit themselves.
Service providers must pay a tax penalty to return the credit amount if they claim a credit that is larger than what the small employer was actually eligible for, such as if the employer incorrectly certifies its employee headcount.
Fee reductions received by a small employer from their plan service provider are excluded from the employer's taxable income, and the provider cannot claim a tax deduction for those fee reductions.
Who it helps · who it burdens.
Who it helps
- Small employers with 10 or fewer employeesThey can claim a larger tax credit (100% of startup costs up to $2,500, up from 50% up to $500) when setting up a retirement plan that accepts federal Saver's Match contributions. Additionally, any fee reductions they receive from their plan service providers are excluded from their taxable income.
- Retirement plan service providersThey can claim a federal tax credit for up to three years if they reduce their startup fees for small employers by the amount of the credit.
Who it burdens
- Retirement plan service providersThey are prohibited from claiming a tax deduction for the fee reductions they provide to small employers, and they must pay a tax penalty to return the credit amount if they claim a credit larger than what the employer was actually eligible for.
Who backs it
- Federal governmentThe federal government foregoes tax revenue to finance the new and expanded tax credits for microemployers and retirement plan service providers.