The Automatic IRA Act of 2024 has been reintroduced by Representative Richard Neal, D-Mass., the ranking member of the House Ways and Means Committee. This measure requires companies with more than ten workers to automatically enroll their workers in IRAs or other comparable automatic contribution plans, such as 401(k)s, if they do not currently offer a retirement plan. After adopting a plan, small firms may be eligible for the current startup tax credit or a recently proposed $500 tax credit for three years that is only applicable to automatic IRAs.
Exemptions for employers:
- With 10 or less employees
- That are newly developed (Less than two years)
- Who currently offers a retirement plan
- With governmental or religious organization plans
“Building upon, expanding, and improving the private pension system in a manner that explicitly protects and complements employer-sponsored plans and arrangements” is how the bill summarized it.
It’s important to note that this is a separate proposal from the Retirement Savings for Americans Act, which seeks to establish a new savings program, “The American Worker Retirement Plan” which would allow access to federally sponsored, portable, tax-advantaged savings accounts.
The summary presented contains information about the Automatic IRA Act, such as:
- Contribution caps
- Lifetime income requirements
- Investments
- Credits for small companies.
If the bill gets approved, it would take effect for plan years that begin after 2026 and apply the new small employer automatic IRA credit to tax years that start after 2024.
