Overview
Title
To amend the Internal Revenue Code of 1986 to make the credit for small employer pension plan startup costs and the retirement auto-enrollment credit available to tax-exempt eligible small employers.
ELI5 AI
S. 4965 wants to help small non-profit groups save money when they start a retirement plan for their workers, by giving them a special money-saving treat on their taxes. This treat will start after December 31, 2024, and it's like getting a little extra allowance that they don't have to pay back to help take care of their employees.
Summary AI
S. 4965 aims to amend the Internal Revenue Code to extend certain tax credits to small tax-exempt employers. Specifically, it makes the credit for small employer pension plan startup costs and the retirement auto-enrollment credit available to these organizations. The bill defines eligible employers as those recognized under section 501(c) of the tax code and exempts them from payroll taxes up to the amount of the credit. This legislation is set to take effect for tax years beginning after December 31, 2024.
Published
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Bill Statistics
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AnalysisAI
General Summary of the Bill
The Small Nonprofit Retirement Security Act of 2024 is a legislative proposal aiming to amend the Internal Revenue Code of 1986. This amendment seeks to extend certain tax credits related to pension plan startup costs and retirement auto-enrollment to small, tax-exempt employers. By allowing these employers to utilize existing credits, the bill effectively provides a financial incentive for nonprofit organizations to establish and maintain retirement benefits for their employees. This adjustment would treat these tax credits as offsets against the payroll taxes paid by those employers.
Summary of Significant Issues
Several key issues present themselves within this bill. One major concern is the complexity of the language and the numerous references made to various sections of the Internal Revenue Code. Such complexity might make it challenging for smaller tax-exempt employers, who might not have access to substantial legal or tax resources, to understand and benefit from this legislation.
Another issue is the effective date of the provisions, which is set for tax years beginning after December 31, 2024. This delay could render the intended benefits less timely, especially if smaller nonprofits are facing urgent retirement planning needs due to current economic conditions.
The bill also lacks specific figures or percentages related to payroll taxes or the available credits, which can lead to uncertainty in financial planning for the affected employers. Furthermore, there are redundant definitions within the document, which might muddy clarity and readability.
Finally, the complexity in calculating the credits and limitations could favor larger organizations with better-resourced tax departments, sidelining smaller nonprofits. Additionally, the bill’s proposal for transferring funds to the Old-Age, Survivors, and Disability Trust Fund is vague regarding the timing and manner of these transfers, potentially causing budget planning challenges.
Impact on the Public
Broadly speaking, this bill could positively impact employees of nonprofit organizations by incentivizing these organizations to offer retirement plans, thus enhancing retirement security for workers who often lack access to such benefits. This alignment with broader public interests addresses a significant gap in retirement planning that nonprofits traditionally face due to limited financial resources.
Impact on Specific Stakeholders
For tax-exempt small employers, such as nonprofit organizations, the bill offers potential cost savings and financial encouragement to establish and enhance retirement savings plans for their employees. By reducing the financial burden associated with setting up these plans, nonprofits might find themselves better able to compete with private sector employers in terms of employee benefits. This could aid in employee retention and satisfaction, adding long-term value to nonprofit enterprises.
On the downside, the intricate nature of the bill and delayed implementation may pose challenges for smaller nonprofits that lack dedicated tax expertise. Without proper guidance or resources, these organizations might struggle to navigate the provisions effectively, potentially missing out on the benefits the bill intends to provide.
In conclusion, while the Small Nonprofit Retirement Security Act of 2024 holds significant promise for enhancing retirement options within the nonprofit sector, its success largely hinges on clear guidance and support to ensure that all eligible entities can effectively access and understand the benefits it offers.
Issues
The complex language and numerous references to different sections of the Internal Revenue Code in Section 2 may make the bill difficult for a layperson to understand, preventing smaller tax-exempt employers from accessing its potential benefits.
The effective date set for taxable years beginning after December 31, 2024, in Section 2 might delay the benefits of the changes significantly, potentially affecting any urgent needs or current economic conditions that tax-exempt small employers face.
Section 2 does not provide specific figures or percentages for the payroll tax or credits, which could lead to uncertainty in financial planning for tax-exempt employers, possibly hindering their ability to benefit from the bill effectively.
The recurring definition of 'tax-exempt eligible employer' in Section 2 might be redundant, and consolidation of these definitions may improve clarity and reduce unnecessary repetition, streamlining the bill's readability.
The complexity in the calculation of credits and limitations, as described in Section 2 due to multiple referenced sections, might favor larger organizations with better-resourced tax departments, creating an implicit bias.
The vagueness of the timing and manner of the transfers to the Old-Age, Survivors, and Disability Trust Fund in Section 2 could create significant budget planning uncertainties and financial concerns for the public.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the act states that it is officially called the “Small Nonprofit Retirement Security Act of 2024.”
2. Retirement credits made available to tax-exempt small employers Read Opens in new tab
Summary AI
The section of the bill amends the Internal Revenue Code to provide tax-exempt small employers with specific credits related to pension plan startup costs and retirement auto-enrollment, treating them as credits against payroll taxes they pay. It also includes limits on the amount of credit a tax-exempt employer can receive based on the payroll tax paid, and these changes will apply to taxable years starting after December 31, 2024, with provisions to ensure funds continue supporting Social Security trust funds despite reduced Treasury revenue.