I 

118TH CONGRESS 

2D SESSION H. R. 7293 

To amend the Internal Revenue Code of 1986 to provide rules for automatic 

contribution retirement plans and arrangements. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 7, 2024 

Mr. NEAL introduced the following bill; which was referred to the Committee 

on Ways and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

rules for automatic contribution retirement plans and 

arrangements. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS, ETC. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Automatic IRA Act of 2024’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents, etc. 

Sec. 2. Automatic contribution plan or arrangement. 

Sec. 3. Credit for certain small employer automatic IRA arrangements. 

Sec. 4. Treatment of automatic IRA arrangements under State law. 


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1 (c) AMENDMENT OF 1986 CODE.—Except as other2 wise expressly provided, whenever in this subtitle an 

3 amendment or repeal is expressed in terms of an amend4 ment to, or repeal of, a section or other provision, the ref5 erence shall be considered to be made to a section or other 

6 provision of the Internal Revenue Code of 1986. 

7 SEC. 2. AUTOMATIC CONTRIBUTION PLAN OR ARRANGE8 MENT. 

9 (a) AUTOMATIC CONTRIBUTION PLAN OR ARRANGE10 MENT.— 

11 (1) IN GENERAL.—Section 414 is amended by 

12 adding at the end the following: 

13 ‘‘(dd) AUTOMATIC CONTRIBUTION PLAN OR AR14 RANGEMENT.—For purposes of this title— 

15 ‘‘(1) IN GENERAL.—The term ‘automatic con16 tribution plan or arrangement’ means— 

17 ‘‘(A) a defined contribution plan that— 

18 ‘‘(i) is described in clause (i), (ii), or 

19 (iv) of section 219(g)(5)(A), 

20 ‘‘(ii) includes a qualified cash or de21 ferred arrangement or a salary reduction 

22 arrangement, and 

23 ‘‘(iii) meets the notice, eligibility, con24 tribution, fee, and lifetime income requireVerDate Sep 11 2014 20:48 Feb 09, 2024 Jkt 049200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H7293.IH H7293

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1 ments of paragraphs (2), (3), (4), (6), and 

2 (7), respectively, 

3 ‘‘(B) an automatic IRA arrangement de4 scribed in paragraph (8), 

5 ‘‘(C) an arrangement described in section 

6 408(p) that meets the notice, contribution, in7 vestment, and fee requirements described in 

8 paragraphs (2), (4), (5), (6), respectively, and 

9 ‘‘(D) a plan described in clause (i), (ii), 

10 (iv), (v), or (vi) of section 219(g)(5)(A) that is 

11 established and maintained by an employer as 

12 of the date of enactment of the Automatic IRA 

13 Act of 2024, or a plan described in section 

14 219(g)(5)(A)(iv) that is not subject to title I of 

15 the Employee Retirement Income Security Act 

16 of 1974 and offers annuity contracts, or makes 

17 custodial accounts available to employees, as of 

18 such date. 

19 ‘‘(2) NOTICE REQUIREMENTS.—A plan or ar20 rangement shall be treated as meeting the notice re21 quirements of this paragraph with respect to an em22 ployee if the plan or arrangement meets notice re23 quirements similar to the notice requirements of sec24 tion 401(k)(13)(E). 

25 ‘‘(3) ELIGIBILITY REQUIREMENTS.— 


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1 ‘‘(A) IN GENERAL.—The requirements of 

2 this paragraph shall be treated as met if all em3 ployees of the employer are eligible to partici4 pate in an automatic contribution plan or ar5 rangement maintained or facilitated by the em6 ployer. 

7 ‘‘(B) CERTAIN EXCLUSIONS.—The fol8 lowing employees may be excluded from consid9 eration in determining whether the require10 ments of this paragraph are met: 

11 ‘‘(i) INDIVIDUALS LESS THAN 21 

12 YEARS OLD.—Any employee who has not 

13 attained age 21. 

14 ‘‘(ii) CERTAIN OTHER EMPLOYEES.— 

15 Any employee described in section 

16 410(b)(3). 

17 ‘‘(iii) SERVICE REQUIREMENTS.—Any 

18 employee who has completed neither of the 

19 following periods of service with the em20 ployer maintaining or facilitating the plan 

21 or arrangement: 

22 ‘‘(I) The period permitted under 

23 section 410(a)(1) (determined without 

24 regard to subparagraph (B)(i) there25 of). 


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1 ‘‘(II) A period of 2 consecutive 

2 12-month periods during each of 

3 which the employee has at least 500 

4 hours of service. 

5 For purposes of subclause (II), 12-month 

6 periods shall be determined in the same 

7 manner as under the last sentence of sec8 tion 410(a)(3)(A). 

9 ‘‘(iv) CERTAIN STUDENTS IN CASE OF

10 A 403(b) PLANS.—In the case of an annu11 ity contract described in section 403(b), 

12 employees who are students, but only to 

13 the extent such employees may be excluded 

14 under the last sentence of 403(b)(12)(A). 

15 ‘‘(C) SPECIAL RULES FOR CONTROLLED

16 GROUPS.—All eligible employees of an employer 

17 need not be eligible to participate in the same 

18 automatic contribution plan or arrangement. 

19 For purposes of this subsection, the term ‘em20 ployer’ shall include all employers treated as a 

21 single employer under subsection (b), (c), (m), 

22 or (o) of section 414. 

23 ‘‘(D) ENTRY DATES.—Rules similar to the 

24 rules of section 410(a)(4) shall apply with re25 spect to employees who have satisfied the age 


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1 and service requirements referenced in subpara2 graph (B) and who are otherwise entitled to 

3 participate in a plan or arrangement. 

4 ‘‘(E) AUTOMATIC IRAS FOR NON-EMPLOY5 EES.—The Secretary shall by regulation or 

6 other guidance provide for making available 

7 automatic IRAs to individuals who provide serv8 ices that do not constitute employment. 

9 ‘‘(4) CONTRIBUTION REQUIREMENTS.— 

10 ‘‘(A) IN GENERAL.—The requirements of 

11 this paragraph shall be treated as met if, under 

12 the plan or arrangement, each employee eligible 

13 to participate in the plan or arrangement is 

14 treated as having elected to have the employer 

15 make elective contributions in an amount equal 

16 to the qualified percentage of compensation. 

17 ‘‘(B) ELECTION OUT.—The election treat18 ed as having been made under subparagraph 

19 (A) shall cease to apply with respect to any em20 ployee if such employee makes an affirmative 

21 election— 

22 ‘‘(i) not to have such contributions 

23 made, or 


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1 ‘‘(ii) to make elective contributions at 

2 a level specified in such affirmative elec3 tion. 

4 ‘‘(C) QUALIFIED PERCENTAGE.—For pur5 poses of this paragraph, and except as provided 

6 in subparagraph (D)(i), the term ‘qualified per7 centage’ means, with respect to any employee, 

8 any percentage determined under the plan or 

9 arrangement if such percentage is applied uni10 formly, does not exceed 15 percent (10 percent 

11 during the period described in clause (i)), and 

12 is at least— 

13 ‘‘(i) 6 percent during the period be14 ginning on the date on which the first elec15 tive contribution described in subpara16 graph (A) is made with respect to such 

17 employee and ending on the last day of the 

18 first plan year which begins after such 

19 date, 

20 ‘‘(ii) 7 percent during the first plan 

21 year following the plan year described in 

22 clause (i), 

23 ‘‘(iii) 8 percent during the first plan 

24 year following the plan year described in 

25 clause (ii), 


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1 ‘‘(iv) 9 percent during the first plan 

2 year following the plan year described in 

3 clause (iii), and 

4 ‘‘(v) 10 percent during any subse5 quent plan year. 

6 ‘‘(D) RULES RELATING TO AUTOMATIC

7 IRA ARRANGEMENTS.—For purposes of this 

8 paragraph— 

9 ‘‘(i) QUALIFIED PERCENTAGE.—In 

10 the case of an automatic IRA arrange11 ment, the term ‘qualified percentage’ 

12 means, with respect to an employee for any 

13 taxable year, a percentage equal to the 

14 minimum percentage described for the tax15 able year under subparagraph (C) deter16 mined by substituting ‘taxable year of the 

17 employee’ for ‘the plan year’ each place it 

18 appears. 

19 ‘‘(ii) PAYROLL DEDUCTION CONTRIBU20 TIONS.—In the case of an automatic IRA 

21 arrangement, any reference in this para22 graph to elective contributions shall be 

23 treated as including a reference to payroll 

24 deduction contributions. 

25 ‘‘(5) INVESTMENT REQUIREMENTS.— 


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1 ‘‘(A) IN GENERAL.— 

2 ‘‘(i) DEFAULT INVESTMENTS.—A plan 

3 or arrangement shall be treated as meeting 

4 the requirements of this paragraph if in 

5 the absence of an investment election by a 

6 participant or beneficiary, amounts are in7 vested only in the class of assets or funds 

8 described in subparagraph (B). 

9 ‘‘(ii) REQUIRED INVESTMENT OP10 TIONS IN AUTOMATIC IRA ARRANGE11 MENT.—In addition to the default invest12 ment requirement of clause (i), an auto13 matic IRA arrangement shall be treated as 

14 meeting the requirements of this para15 graph if the arrangement provides the op16 tion of investing in each of the classes of 

17 assets or funds described in subparagraphs 

18 (B), (C), (D), and (E), and no other in19 vestment options. 

20 ‘‘(B) TARGET DATE/LIFECYCLE OPTION.— 

21 The class of assets or funds described in this 

22 clause is the class of assets or funds that con23 stitutes an investment fund product or model 

24 portfolio described in Department of Labor reg25 ulation section 2550.404c–5(e)(4)(i). 


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1 ‘‘(C) PRINCIPAL PRESERVATION.—The 

2 class of assets or funds described in this clause 

3 is the class of assets or funds that is designed 

4 to protect the principal of the individual on an 

5 ongoing basis. 

6 ‘‘(D) BALANCED OPTION.—The class of 

7 assets or funds described in this clause is the 

8 class of assets or funds that constitutes a quali9 fied default investment alternative under De10 partment of Labor regulation section 

11 2550.404c–5(e)(4)(ii). 

12 ‘‘(E) OTHER.—Any other class of assets or 

13 funds determined by the Secretary to be a 

14 qualified investment for purposes of this sec15 tion. 

16 ‘‘(6) FEE REQUIREMENTS.—In the case of any 

17 plan or arrangement not otherwise subject to title I 

18 of the Employee Retirement Income Security Act of 

19 1974, under the fee requirements of this paragraph, 

20 no participant, beneficiary, employer, individual re21 tirement account, plan, or arrangement may be 

22 charged unreasonable fees or expenses. 

23 ‘‘(7) LIFETIME INCOME REQUIREMENTS.— 

24 ‘‘(A) IN GENERAL.—Except in the case of 

25 a plan maintained by an eligible employer (as 


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1 defined in section 408(p)(2)(C)(i)), a plan or 

2 arrangement shall be treated as meeting the 

3 lifetime income requirement described in this 

4 paragraph if the plan or arrangement permits 

5 participants to elect to receive at least 50 per6 cent of their vested account balance in a form 

7 of distribution described in section 

8 401(a)(38)(B)(iii). 

9 ‘‘(B) EXCEPTION.— 

10 ‘‘(i) IN GENERAL.—This paragraph 

11 shall not apply with respect to any partici12 pant whose vested account balance is 

13 $200,000 or less at the time of distribu14 tion. 

15 ‘‘(ii) NOT TREATED AS DISCRIMINA16 TORY IN FAVOR OF HIGHLY COMPENSATED

17 EMPLOYEES.—A plan shall not be treated 

18 as failing to meet the requirements of sec19 tion 401(a)(4) solely by reason of applying 

20 the exception of clause (i) to the require21 ments of subparagraph (A). 

22 ‘‘(8) AUTOMATIC IRA ARRANGEMENT.— 

23 ‘‘(A) IN GENERAL.—For purposes of this 

24 paragraph, the term ‘automatic IRA arrange25 ment’ means, with respect to an employer (and 


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1 trustee or issuer designated by the employer), 

2 an arrangement facilitated by the employer 

3 which meets the requirements of this paragraph 

4 and the contribution, investment, and fee re5 quirements of paragraphs (4), (5), and (6), re6 spectively, and under which an employee— 

7 ‘‘(i) may elect— 

8 ‘‘(I) to have the employer make 

9 payroll deduction deposits on behalf of 

10 the individual as payroll deduction 

11 contributions to an individual retire12 ment account, or 

13 ‘‘(II) to have such payments paid 

14 to the employee directly in cash, 

15 ‘‘(ii) is treated as having made the 

16 election under clause (i)(I) at the level de17 termined under paragraph (4)(D) until the 

18 individual makes an affirmative election 

19 not to have such contributions made (or to 

20 have such contributions made at a level 

21 specified in the affirmative election), and 

22 ‘‘(iii) may elect to modify prospec23 tively the level at which contributions are 

24 made and the manner in which such con25 tributions are invested for such year. 


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1 ‘‘(B) ADMINISTRATIVE REQUIREMENTS.— 

2 ‘‘(i) PAYMENTS.—The requirements of 

3 this paragraph shall not be treated as met 

4 with respect to any automatic IRA ar5 rangement unless the employer makes the 

6 payments elected or treated as elected 

7 under subparagraph (A)(i) on or before the 

8 last day of the month following the month 

9 in which the compensation otherwise would 

10 have been payable to the employee in cash. 

11 ‘‘(ii) NOTICE OF ELECTION PERIOD.— 

12 The requirements of this paragraph shall 

13 not be treated as met with respect to any 

14 year unless the employer notifies each em15 ployee eligible to participate, within a rea16 sonable period of time before the beginning 

17 of such year (and, for the first year the 

18 employee is so eligible, a reasonable period 

19 of time before the first day such employee 

20 is so eligible), of— 

21 ‘‘(I) the opportunity to elect to 

22 have contributions made, or to be 

23 treated as so electing, under clause 

24 (i)(I), or (ii), of subparagraph (A), 


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1 ‘‘(II) the opportunity to elect not 

2 to have payroll deduction contribu3 tions made or to have such contribu4 tions made at a different percentage 

5 or in a different amount, and 

6 ‘‘(III) the opportunity under sub7 paragraph (A)(iii) to modify the man8 ner in which such amounts are in9 vested for such year. 

10 The employer shall provide such notice in 

11 paper form or, if the employee so elects, in 

12 electronic form. 

13 ‘‘(C) ELIGIBILITY REQUIREMENTS.— 

14 ‘‘(i) IN GENERAL.—The requirements 

15 of this paragraph shall not be treated as 

16 met with respect to an automatic IRA ar17 rangement facilitated by the employer un18 less all employees of the employer are eligi19 ble to participate in the arrangement. 

20 ‘‘(ii) CERTAIN EXCLUSIONS.—The fol21 lowing employees may be excluded from 

22 consideration in determining whether the 

23 requirements of this paragraph are met: 


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1 ‘‘(I) INDIVIDUALS LESS THAN 18 

2 YEARS OLD.—Any employee who has 

3 not attained age 18. 

4 ‘‘(II) CERTAIN OTHER EMPLOY5 EES.—Any employee described in sec6 tion 410(b)(3). 

7 ‘‘(III) SERVICE REQUIRE8 MENTS.—Any employee who has not 

9 completed at least 3 months of service 

10 with the employer facilitating the ar11 rangement. 

12 ‘‘(iii) SPECIAL RULES FOR CON13 TROLLED GROUPS.—For purposes of this 

14 subparagraph, all eligible employees of an 

15 employer need not be eligible to participate 

16 in the same arrangement. For purposes of 

17 this clause, the term ‘employer’ shall in18 clude all employers treated as a single em19 ployer under subsection (b), (c), (m), or 

20 (o) of section 414. 

21 ‘‘(iv) AUTOMATIC IRAS FOR NON-EM22 PLOYEES.—The Secretary shall by regula23 tion or other guidance provide for making 

24 available automatic IRAs to individuals 


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1 who provide services that do not constitute 

2 employment. 

3 ‘‘(D) LIMITS ON CONTRIBUTIONS.—An 

4 employer shall not be treated as failing to sat5 isfy the requirements of this section or any 

6 other provision of this title merely because— 

7 ‘‘(i) aggregate payroll deduction con8 tributions by or on behalf of an individual 

9 to individual retirement accounts of the in10 dividual exceed the deductible amount in 

11 effect under section 219(b)(5) (determined 

12 without regard to subparagraph (B) there13 of) for any taxable year in which any pay14 roll deduction contributions by the em15 ployer under an automatic IRA arrange16 ment are made, or 

17 ‘‘(ii) the employer chooses to limit the 

18 payroll deduction contributions under this 

19 subsection on behalf of an employee for 

20 any calendar year in a manner reasonably 

21 designed to avoid exceeding such deduct22 ible amount. 

23 ‘‘(E) DEFAULT TREATMENT AS ROTH

24 IRA.—An employee on whose behalf payroll de25 duction contributions are made to an individual 


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1 retirement account under subparagraph (A) 

2 may elect, at such time and in such manner 

3 and form as the Secretary may prescribe, 

4 whether to treat the individual retirement ac5 count as designated as a Roth IRA. If no such 

6 election is made, the account shall be treated as 

7 designated as a Roth IRA. 

8 ‘‘(F) DEPOSITS TO INDIVIDUAL RETIRE9 MENT ACCOUNTS OF A DESIGNATED TRUSTEE

10 OR ISSUER.— 

11 ‘‘(i) IN GENERAL.—An employer shall 

12 not be treated as failing to satisfy the re13 quirements of this section, or any other 

14 provision of this title, merely because the 

15 employer makes all payroll deduction con16 tributions on behalf of all employees (or all 

17 employees who do not specify an individual 

18 retirement account, trustee, or issuer to re19 ceive the contributions) to individual retire20 ment accounts specified in clause (ii). 

21 ‘‘(ii) INDIVIDUAL RETIREMENT AC22 COUNTS OTHER THAN THOSE SELECTED

23 BY EMPLOYEE.— 

24 ‘‘(I) IN GENERAL.—An employer 

25 may elect to have payroll deduction 


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1 contributions for all employees partici2 pating in an automatic IRA arrange3 ment made to individual retirement 

4 accounts of a trustee or issuer under 

5 the arrangement that has been des6 ignated by the employer, but only if 

7 the provider of such accounts, and the 

8 investments therein, are identified on 

9 the website established under sub10 paragraph (G)(iii). 

11 ‘‘(II) NOTICE.—Subclause (I) 

12 shall not apply unless each participant 

13 is notified in writing that the partici14 pant may direct the participant’s bal15 ance be transferred without cost or 

16 penalty to another individual retire17 ment account established by or on be18 half of the participant. Such notice 

19 shall be in paper form or, if the em20 ployee so elects, electronic form. 

21 ‘‘(iii) EMPLOYERS MAY PERMIT EM22 PLOYEE TO CHOOSE IRA.—If the employer 

23 so elects, the arrangement may provide for 

24 an employee election to have payroll deduc25 tion contributions made to any individual 


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1 retirement account specified by the em2 ployee. 

3 ‘‘(iv) REGULATIONS.—The Secretary 

4 may issue such regulations as are nec5 essary to carry out the purposes of this 

6 subparagraph, including establishment of 

7 procedures to assist employers and individ8 uals in connecting with certified and avail9 able providers of individual retirement ac10 counts and to communicate to individuals 

11 the importance of investment diversifica12 tion. 

13 ‘‘(G) MODEL NOTICE, ETC.—The Secretary 

14 shall— 

15 ‘‘(i) provide a model notice, written in 

16 a manner calculated to be understandable 

17 to the average worker, that is simple to 

18 use— 

19 ‘‘(I) to notify employees of the 

20 requirement under this section for the 

21 employer to provide certain employees 

22 with the opportunity to participate in 

23 an automatic IRA arrangement, and 

24 ‘‘(II) to satisfy the requirements 

25 of subparagraph (B)(ii), 


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1 ‘‘(ii) provide model forms for enroll2 ment, including automatic enrollment, in 

3 an automatic IRA arrangement, 

4 ‘‘(iii) establish a website or other elec5 tronic means that small employers and in6 dividuals can access and use to obtain in7 formation on automatic IRA arrangements 

8 (including clear, standardized, easy-to-com9 pare information on fees and expenses, in10 vestment options and returns, and defaults 

11 in a format prescribed by the Secretary) 

12 and to obtain notices and forms, and 

13 ‘‘(iv) establish a process— 

14 ‘‘(I) for the provider of an auto15 matic IRA arrangement to dem16 onstrate to the Secretary that the ar17 rangement is described in this para18 graph and meets the requirements 

19 specified in paragraph (1)(B), and 

20 ‘‘(II) to certify any arrangement 

21 that the Secretary determines so dem22 onstrates, to regularly monitor compli23 ance and update such determinations 

24 and certifications, and to list all ar25 rangements so certified on the website 


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1 described in clause (iii) as appropriate 

2 for use by employers and participants. 

3 The information referred to in clause (iii) shall 

4 be provided in a manner designed to assist em5 ployers and providers by facilitating the identi6 fication by employers of private-sector providers 

7 of individual retirement accounts, including the 

8 provider’s investment options, that are appro9 priate for use in automatic IRA arrangements. 

10 ‘‘(H) CERTAIN STATE-BASED ARRANGE11 MENTS.—An arrangement facilitated by an em12 ployer shall not fail to be treated as an auto13 matic IRA arrangement merely because such 

14 arrangement is required, provided for, facili15 tated, or otherwise offered, in whole or in part, 

16 by a State (or a political subdivision, agency, or 

17 instrumentality thereof). 

18 ‘‘(I) INDIVIDUAL RETIREMENT AC19 COUNT.—For purposes of this paragraph, the 

20 term ‘individual retirement account’ shall have 

21 the meaning given such term by section 408(a), 

22 except that such term shall include individual 

23 retirement annuities (as defined in section 

24 408(b)).’’. 


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1 (2) OTHER RULES APPLICABLE TO AUTOMATIC

2 IRA ARRANGEMENTS.— 

3 (A) PENALTY FOR FAILURE TO TIMELY

4 REMIT CONTRIBUTIONS TO AUTOMATIC IRA AR5 RANGEMENTS.—Section 4975(c) is amended by 

6 adding at the end the following new paragraph: 

7 ‘‘(7) SPECIAL RULE FOR AUTOMATIC IRA AR8 RANGEMENTS.—For purposes of paragraph (1), if 

9 an employer is required under an automatic IRA ar10 rangement (as defined in section 414(dd)(1)(B)) to 

11 deposit amounts withheld from an employee’s com12 pensation into an individual retirement account 

13 (within the meaning of section 414(dd)(8)(I)) but 

14 fails to do so within the time prescribed under sec15 tion 414(dd)(8)(B)(i), such amounts shall be treated 

16 as assets of the individual retirement account.’’. 

17 (B) WAIVER OF EARLY WITHDRAWAL PEN18 ALTY FOR CERTAIN DISTRIBUTIONS FOLLOWING

19 INITIAL ELECTION TO PARTICIPATE IN AUTO20 MATIC IRA ARRANGEMENT.—Section 72(t) is 

21 amended by adding at the end the following 

22 new paragraph: 

23 ‘‘(11) DISTRIBUTION FOLLOWING INITIAL

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1 RANGEMENT.—Paragraph (1) shall not apply in the 

2 case of a distribution— 

3 ‘‘(A) to an individual from an individual 

4 retirement account (within the meaning of sec5 tion 414(dd)(8)(I)) that is part of an automatic 

6 IRA arrangement (as defined in section 

7 414(dd)(8)(A)), and 

8 ‘‘(B) made not later than 90 days after the 

9 individual is first treated under clause (ii) of 

10 section 414(dd)(8)(A) as having made an elec11 tion under clause (i)(I) of such section.’’. 

12 (C) AUTOMATIC IRA ADVISORY GROUP.— 

13 (i) IN GENERAL.—Not later than 90 

14 days after the date of the enactment of 

15 this Act, the Secretary of the Treasury 

16 shall establish an Automatic IRA Advisory 

17 Group (hereinafter in this subparagraph 

18 referred to as the ‘‘Advisory Group’’). The 

19 purpose of the Advisory Group shall be to 

20 make recommendations, advise, and assist 

21 in the Secretary’s implementation and ad22 ministration of paragraphs (5), (6), and 

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1 matic IRA arrangements in the best finan2 cial interest of savers, including— 

3 (I) the procedures and criteria 

4 for the periodic certification, website 

5 listing, and monitoring of arrange6 ments and investment options that 

7 meet the requirements of those para8 graphs, 

9 (II) user-friendly disclosure re10 garding investment returns and risks, 

11 terms, fees, and expenses to facilitate 

12 comparison, 

13 (III) the use of low-cost invest14 ment options, 

15 (IV) the appropriate use of elec16 tronic and paper methods to provide 

17 notice and disclosure, 

18 (V) any possible learnings or effi19 ciencies based on the Secretary’s pro20 cedures and experience in approving 

21 nonbank individual retirement account 

22 trustees, and 

23 (VI) such other related matters 

24 as may be determined by the Sec25 retary. 


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1 (ii) MEMBERSHIP.—The Advisory 

2 Group shall consist of not more than 15 

3 members and shall be composed of— 

4 (I) such individuals as the Sec5 retary may consider appropriate to 

6 provide expertise regarding the finan7 cial needs and challenges of lower8 and middle-income households, 

9 (II) at least one individual who is 

10 an expert in retirement-related con11 sumer protections or who represents 

12 the general public, and 

13 (III) at least one representative 

14 of the Department of the Treasury. 

15 (iii) COMPENSATION.—The members 

16 of the Advisory Group shall serve without 

17 compensation. 

18 (iv) ADMINISTRATIVE SUPPORT.—The 

19 Department of the Treasury shall provide 

20 appropriate administrative support to the 

21 Advisory Group, including technical assist22 ance. The Advisory Group may use the 

23 services and facilities of such Department, 

24 with or without reimbursement, as deter25 mined by such Department. 


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1 (v) REPORT BY ADVISORY GROUP.— 

2 Not later than 1 year after the date of the 

3 enactment of this Act, the Advisory Group 

4 shall submit to the Secretary of the Treas5 ury a report containing its recommenda6 tions. The Secretary may request that the 

7 Advisory Group submit subsequent reports. 

8 (3) CONFORMING AMENDMENT RELATING TO

9 QUALIFIED CASH OR DEFERRED ARRANGEMENTS.— 

10 Section 401(k)(15)(B)(i) is amended by inserting 

11 ‘‘or section 414(dd)(3)(B)(iii)(II)’’ after ‘‘paragraph 

12 (2)(D)(ii)’’ in the matter preceding subclause (I) 

13 thereof. 

14 (b) EXCISE TAX FOR FAILURE TO MAINTAIN OR FA15 CILITATE AUTOMATIC CONTRIBUTION PLANS OR AR16 RANGEMENTS.— 

17 (1) IN GENERAL.—Chapter 43 is amended by 

18 adding at the end the following new section: 

19 ‘‘SEC. 4980J. FAILURE TO MAINTAIN OR FACILITATE AUTO20 MATIC CONTRIBUTION PLANS OR ARRANGE21 MENTS. 

22 ‘‘(a) GENERAL RULE.— 

23 ‘‘(1) IN GENERAL.—There is hereby imposed a 

24 tax on the failure of an employer to maintain or faVerDate Sep 11 2014 20:48 Feb 09, 2024 Jkt 049200 PO 00000 Frm 00026 Fmt 6652 Sfmt 6201 E:\BILLS\H7293.IH H7293

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1 cilitate an automatic contribution plan or arrange2 ment. 

3 ‘‘(2) EXCEPTION FOR ARRANGEMENTS UNDER

4 QUALIFIED STATE LAW.—Paragraph (1) shall not 

5 apply to an employer to the extent such employer fa6 cilitates an arrangement described in subsection 

7 (f)(3)(B) under a qualified State law. 

8 ‘‘(b) AMOUNT OF TAX.— 

9 ‘‘(1) IN GENERAL.—The amount of the tax im10 posed by subsection (a) on any failure with respect 

11 to an employee shall be $10 for each day in the non12 compliance period with respect to such failure. 

13 ‘‘(2) NONCOMPLIANCE PERIOD.—For purposes 

14 of this section, the term ‘noncompliance period’ 

15 means, with respect to any failure, the period— 

16 ‘‘(A) beginning on the date such failure 

17 first occurs, and 

18 ‘‘(B) ending on the earlier of— 

19 ‘‘(i) the date such failure is corrected, 

20 or 

21 ‘‘(ii) with respect to any employer, the 

22 date that is 3 months after the last date 

23 on which the employee is required to be eli24 gible to participate in an automatic conVerDate Sep 11 2014 20:48 Feb 09, 2024 Jkt 049200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\H7293.IH H7293

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1 tribution plan or arrangement maintained 

2 or facilitated by such employer. 

3 ‘‘(3) ADJUSTMENT FOR INFLATION.— 

4 ‘‘(A) IN GENERAL.—In the case of any 

5 failure relating to maintaining or facilitating a 

6 plan or arrangement in a calendar year begin7 ning after 2026, the $10 amount under para8 graph (1) shall be increased by an amount 

9 equal to such dollar amount multiplied by the 

10 cost-of-living adjustment determined under sec11 tion 1(f)(3) for the calendar year determined by 

12 substituting ‘calendar year 2025’ for ‘calendar 

13 year 2016’ in subparagraph (A)(ii) thereof. 

14 ‘‘(B) ROUNDING.—If any amount adjusted 

15 under subparagraph (A) is not a whole dollar 

16 amount, such amount shall be rounded to the 

17 nearest whole dollar amount. 

18 ‘‘(c) LIMITATIONS ON AMOUNT OF TAX.— 

19 ‘‘(1) TAX NOT TO APPLY WHERE FAILURE NOT

20 DISCOVERED EXERCISING REASONABLE DILI21 GENCE.—No tax shall be imposed by subsection (a) 

22 on any failure during any period for which it is es23 tablished to the satisfaction of the Secretary that 

24 none of the persons referred to in subsection (e) 


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1 knew, nor exercising reasonable diligence would have 

2 known, that such failure existed. 

3 ‘‘(2) TAX NOT TO APPLY TO FAILURES CORRECTED WITHIN 91 4 ⁄2 MONTHS.—No tax shall be im5 posed by subsection (a) on any failure if— 

6 ‘‘(A) such failure was due to reasonable 

7 cause and not to willful neglect, and 

8 ‘‘(B) such failure is corrected during the 

91 9 ⁄2-month period beginning on the first date 

10 any of the persons referred to in subsection (e) 

11 knew that such failure existed, or exercising 

12 reasonable diligence would have known. 

13 ‘‘(3) OVERALL LIMITATION FOR UNINTEN14 TIONAL FAILURES.—In the case of failures which 

15 are due to reasonable cause and not to willful ne16 glect— 

17 ‘‘(A) GENERAL RULE.—The tax imposed 

18 by subsection (a) for failures during the taxable 

19 year of the employer shall not exceed $500,000. 

20 ‘‘(B) TAXABLE YEARS IN THE CASE OF

21 CERTAIN CONTROLLED GROUPS.—For purposes 

22 of this subparagraph, if not all persons who are 

23 treated as a single employer for purposes of this 

24 section have the same taxable year, the taxable 

25 years taken into account shall be determined 


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1 under principles similar to the principles of sec2 tion 1561. 

3 ‘‘(4) WAIVER BY SECRETARY.—In the case of a 

4 failure which is due to reasonable cause and not to 

5 willful neglect, the Secretary may waive part or all 

6 of the tax imposed by subsection (a) to the extent 

7 that the payment of such tax would be excessive rel8 ative to the failure involved. 

9 ‘‘(d) TAX NOT TO APPLY IN CERTAIN CASES.—This 

10 section shall not apply in the case of— 

11 ‘‘(1) any employer that employed no more than 

12 10 employees each of whom received at least $5,000 

13 of compensation from the employer during the prior 

14 calendar year, 

15 ‘‘(2) any employer with respect to a govern16 mental plan (within the meaning of section 414(d)), 

17 ‘‘(3) any employer with respect to a church plan 

18 (within the meaning of section 414(e)), or 

19 ‘‘(4) any employer that has been in existence 

20 for fewer than 2 years, taking into account all pred21 ecessor employers. 

22 ‘‘(e) LIABILITY FOR TAX.—The employer shall be lia23 ble for the tax imposed by subsection (a) on a failure. All 

24 employers, determined without regard to subsection (f)(2), 

25 shall be jointly and severally liable for the liability of any 


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1 other employer with which they are aggregated under sub2 section (f)(2). 

3 ‘‘(f) DEFINITIONS.—For purposes of this section— 

4 ‘‘(1) AUTOMATIC CONTRIBUTION PLAN OR AR5 RANGEMENT.—The term ‘automatic contribution 

6 plan or arrangement’ has the meaning given such 

7 term under section 414(dd), and 

8 ‘‘(2) EMPLOYER.—The term ‘employer’ includes 

9 all employers treated as a single employer under 

10 subsection (b), (c), (m), or (o) of section 414. 

11 ‘‘(3) QUALIFIED STATE LAW.—The term ‘quali12 fied State law’ means a State law (as it may be 

13 amended from time to time) that— 

14 ‘‘(A) was enacted before January 1, 2027, 

15 and 

16 ‘‘(B) requires certain employers to facili17 tate an automatic IRA arrangement pursuant 

18 to a payroll deduction savings program of the 

19 State.’’. 

20 (2) CLERICAL AMENDMENT.—The table of sec21 tions for chapter 43 is amended by adding at the 

22 end the following new item: 

‘‘Sec. 4980J. Failure to maintain or facilitate automatic contribution plans or 

arrangements.’’. 


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1 (c) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to plan years beginning after De3 cember 31, 2026. 

4 SEC. 3. CREDIT FOR CERTAIN SMALL EMPLOYER AUTO5 MATIC IRA ARRANGEMENTS. 

6 (a) IN GENERAL.—Subpart D of part IV of sub7 chapter A of chapter 1 is amended by adding at the end 

8 the following new section: 

9 ‘‘SEC. 45BB. CREDIT FOR CERTAIN SMALL EMPLOYER 

10 AUTOMATIC IRA ARRANGEMENTS. 

11 ‘‘(a) GENERAL RULE.—For purposes of section 38, 

12 in the case of an eligible employer, the small employer 

13 automatic IRA arrangement credit determined under this 

14 section for any taxable year in the credit period is $500. 

15 ‘‘(b) DEFINITIONS.—For purposes of this section— 

16 ‘‘(1) ELIGIBLE EMPLOYER.—The term ‘eligible 

17 employer’ means, with respect to the calendar year 

18 in which the taxable year begins, an employer 

19 which— 

20 ‘‘(A)(i) facilitates an automatic IRA ar21 rangement (as defined in section 414(dd)(8)), 

22 or an arrangement described in 4980J(a)(2), 

23 and 

24 ‘‘(ii) is described in 408(p)(2)(C)(i), and 


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1 ‘‘(B) did not maintain an eligible employer 

2 plan during the portion of the calendar year 

3 preceding the commencement of such arrange4 ment and the 2 preceding calendar years. 

5 ‘‘(2) CREDIT PERIOD.—The term ‘credit period’ 

6 means the first 3 calendar years beginning after the 

7 date of the enactment of this section in which the 

8 eligible employer participates in the arrangement. 

9 ‘‘(3) ELIGIBLE EMPLOYER PLAN.—The term 

10 ‘eligible employer plan’ means a qualified employer 

11 plan within the meaning of section 4972(d). 

12 ‘‘(c) OTHER RULES.—For purposes of this section, 

13 rules similar to the rules of section 45E(e)(2) shall 

14 apply.’’. 

15 (b) CREDIT ALLOWED AS PART OF GENERAL BUSI16 NESS CREDIT.—Section 38(b) is amended by striking 

17 ‘‘plus’’ at the end of paragraph (40), by striking the period 

18 at the end of paragraph (41) and inserting ‘‘, plus’’, and 

19 by adding at the end the following new paragraph: 

20 ‘‘(42) the small employer automatic IRA ar21 rangement credit determined under section 

22 45BB(a).’’. 

23 (c) CLERICAL AMENDMENT.—The table of sections 

24 for subpart D of part IV of subchapter A of chapter 1 

25 is amended by adding at the end the following new item: 

‘‘Sec. 45BB. Credit for certain small employer automatic IRA arrangements.’’. 


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1 (d) EFFECTIVE DATE.—The amendments made by 

2 this section shall apply to taxable years beginning after 

3 December 31, 2024. 

4 SEC. 4. TREATMENT OF AUTOMATIC IRA ARRANGEMENTS 

5 UNDER STATE LAW. 

6 (a) PREEMPTION OF STATE LAW.—This Act, and the 

7 amendments made thereby, shall supersede any law of a 

8 State which would directly or indirectly prohibit or restrict 

9 an automatic IRA arrangement (as defined in section 

10 414(dd)(8) of the Internal Revenue Code of 1986). 

11 (b) EMPLOYERS MAINTAINING AUTOMATIC IRA AR12 RANGEMENT.— 

13 (1) IN GENERAL.—Any employer maintaining 

14 such an arrangement shall not be subject to any re15 quirement imposed by a State or political subdivision 

16 thereof to facilitate a payroll deduction savings pro17 gram of a State or political subdivision thereof. 

18 (2) QUALIFIED STATE LAW EXCEPTION.—Para19 graph (1) shall not apply with respect to any em20 ployer to the extent that such employer facilitates an 

21 arrangement under a qualified State law (as defined 

22 in section 4980J(f)(3) of the Internal Revenue Code 

23 of 1986) for employees with respect to whom such 

24 qualified State law applies. 

Æ 


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