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The Resurgence of the Automatic IRA Act

The Resurgence of the Automatic IRA Act

June 10, 2024

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 offer a retirement plan

  • With governmental or religious organization plans

The Bill summarized it as, "building upon, expanding, and improving the private pension system in a manner that explicitly protects and complements employer-sponsored plans and arrangements."

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.

Sources :

https://democrats-waysandmeans.house.gov/media-center/press-releases/what-theyre-saying-neals-automatic-ira-act-2024

https://www.napa-net.org/news-info/daily-news/federal-auto-ira-bill-uncovered-workers-introduced-house


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This material was created to provide accurate and reliable information on the subjects covered. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Integrity Benefit Partners and its affiliates do not provide legal or tax services.

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