117 S4153 IS: Incentivizing Small Business Retirement Savings Act U.S. Senate 2022-05-05 text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.

II117th CONGRESS2d SessionS. 4153IN THE SENATE OF THE UNITED STATESMay 5, 2022Mr. Hickenlooper introduced the following bill; which was read twice and referred to the Committee on FinanceA BILLTo amend the Internal Revenue Code of 1986 to enhance the credit for small employer pension plan startup costs.

1.

Short title

This Act may be cited as the Incentivizing Small Business Retirement Savings Act.

2.

Credits for employer contributions by certain eligible employers

(a)

In general

Section 45E of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:(f)

Additional credit for employer contributions by certain eligible employers

(1)

In general

In the case of an eligible employer, the credit allowed for the taxable year under subsection (a) (determined without regard to this subsection, and after the application of subsection (b)) shall be increased by an amount equal to the applicable percentage of employer contributions (other than any elective deferrals (as defined in section 402(g)(3))) made by the employer to an eligible employer plan (other than a defined benefit plan (as defined in section 414(j))) for the taxable year.(2)

Limitations

(A)

Dollar limitation

The amount determined under paragraph (1) (before the application of subparagraph (B)) with respect to any employee of the employer shall not exceed $1,000.(B)

Credit phase-out

With respect to any taxable year, the $1,000 amount under subparagraph (A) shall be reduced by 2 percent for each employee by which the number of employees of the employer for the preceding taxable year exceeds 50.(C)

Only non-highly compensated employees taken into account

For purposes of paragraph (1), only contributions with respect to employees who are not highly compensated employee (as defined in section 414(q)) shall be taken into account.(3)

Applicable percentage

For purposes of this subsection, the applicable percentage is—(A)for the first credit year with respect to the employer for purposes of subsection (b) and the taxable year immediately following such first credit year, 100 percent,(B)for the 2nd taxable year following such first credit year, 75 percent,(C)for the 3rd taxable year following such first credit year, 50 percent,(D)for the 4th taxable year following such first credit year, 25 percent, and(E)zero percent thereafter..(b)

Disallowance of deduction

Section 45E(e)(2) of the Internal Revenue Code of 1986 is amended to read as follows:(2)

Disallowance of deduction

No deduction shall be allowed—(A)for that portion of the qualified startup costs paid or incurred for the taxable year which is equal to so much of the portion of the credit determined under subsection (a) as is properly allocable to such costs, or(B)for that portion of the employer contributions made by the employer for the taxable year which is equal to so much of the credit increase determined under subsection (f) as is properly allocable to such contributions..(c)

Effective date

The amendments made by this section shall apply to taxable years beginning after the date of the enactment of this Act.