Representative Lori Trahan and Mike Kelly’s Legislation to Incentivize Retirement Fund Enrollment for Small Business Employees Passes House
Washington, DC – Today, Congresswoman Lori Trahan’s (D-MA-03) Small Employer Retirement Savings Auto-Enrollment Credit Act passed the House of Representatives as a part of the larger Setting Every Community Up for Retirement Enhancement (SECURE) Act.
The Small Employer Retirement Savings Auto-Enrollment Credit Act was originally introduced by Representatives Trahan and Mike Kelly (R-PA-16) in March of this year, and was designed to bolster automatic enrollment in 401(k) retirement plans for small businesses.
“Small businesses and their employees are the lifeblood of the American economy, and the engine driving growth in cities and towns across Massachusetts. There were 1.5 million Bay Staters employed by small businesses in 2018 – a remarkable 46.1% of the entire private workforce. It is important for Congress to support them and their employees. The legislation that passed the House today, if signed into law, offers tax incentives to small businesses that adopt auto-enrollment 401(k) plans so that when the time comes, employees can retire with dignity. Retirement security is a top priority, and I am honored to have this opportunity to make progress on this issue,” said Rep. Trahan.
“Incentivizing more small businesses to offer their employees a retirement plan is good tax policy, which is why Rep. Trahan and I wrote legislation earlier this year to achieve that goal. The fact that it was included in the SECURE Act, which has now passed the House, is welcome news. We have to make sure that workers don’t lose valuable time investing in their retirement savings during their working years, and this provision, and the SECURE Act more broadly, will greatly benefit future retirees. When we work together, great things happen for all Americans!” said Rep. Kelly.
Small employers with up to 100 employees would be eligible for a credit of $500 per year for up to three years for new qualified retirement plans that include auto-enrollment. Small employers would also be eligible for a credit of $500 per year for up to three years if they added auto-enrollment as a feature to an existing plan.
The SECURE Act is a compilation of recent bipartisan and bicameral retirement legislation aimed at increasing retirement coverage and security. The basis of the SECURE Act is the Retirement Enhancement Savings Act (RESA), which has been introduced in both the House and Senate in the current and past Congresses. A number of SECURE Act provisions were in both RESA and other legislation, such as the provisions that would allow for open multiple employer plans (MEPs). Open MEPs allow unrelated businesses to band together to offer a retirement plan to their workers and would provide coverage for thousands of individuals who work for small employers. This step would go a long way towards closing the retirement coverage gap, while maintaining important federal protections for participants under the Employee Retirement Income Security Act.