other employer with which they are aggregated under sub-
section (f)(2). 
‘‘(f) DEFINITIONS AND SPECIAL RULES.—For pur-
poses of this section— 
‘‘(1) AUTOMATIC CONTRIBUTION PLAN OR AR-
RANGEMENT.—The term ‘automatic contribution 
plan or arrangement’ has the meaning given such 
term under section 414(dd), and 
‘‘(2) EMPLOYER.—The term ‘employer’ includes 
all employers treated as a single employer under 
subsection (b), (c), (m), or (o) of section 414. 
‘‘(3) QUALIFIED STATE LAW.—The term ‘quali-
fied State law’ means a State law (as it may be 
amended from time to time) that— 
‘‘(A) was enacted before January 1, 2028, 
and 
‘‘(B) requires certain employers to facili-
tate an automatic IRA arrangement pursuant 
to a payroll deduction savings program of the 
State. 
‘‘(4) TREATMENT OF PROFESSIONAL EMPLOYER 
ORGANIZATIONS AND THEIR CUSTOMERS.— 
‘‘(A) IN GENERAL.—In the case of an em-
ployer who under a qualified service contract is 
a customer of a professional employer organiza-
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tion with respect to an employee who performs 
services for the customer under such contract— 
‘‘(i) such customer shall be treated as 
the employer (and such professional em-
ployer organization shall not) with respect 
to such employee, and 
‘‘(ii) any automatic contribution plan 
or arrangement maintained or facilitated 
by such professional employer organization 
with respect to such employee shall be 
treated as maintained or facilitated, as the 
case may be, by the customer. 
‘‘(B) QUALIFIED
SERVICE
CONTRACT.— 
For purposes of this paragraph, the term 
‘qualified service contract’ means a service con-
tract that meets the requirements of section 
7705(e)(2). For purposes of the preceding sen-
tence, the requirements of such section shall be 
determined without regard to the term ‘cer-
tified’ therein, subparagraph (F) thereof, and 
whether the professional employer organization 
with respect to such contract is a certified pro-
fessional employer organization under section 
7705.’’. 
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(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 43 is amended by adding at the 
end the following new item: 
‘‘Sec. 4980J. Failure to maintain or facilitate automatic contribution plans or 
arrangements.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to plan years beginning after De-
cember 31, 2027. 
SEC. 3. CREDIT FOR CERTAIN SMALL EMPLOYER AUTO-
MATIC IRA ARRANGEMENTS. 
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 is amended by adding at the end 
the following new section: 
‘‘SEC. 45BB. CREDIT FOR CERTAIN SMALL EMPLOYER 
AUTOMATIC IRA ARRANGEMENTS. 
‘‘(a) GENERAL RULE.—For purposes of section 38, 
in the case of an eligible employer, the small employer 
automatic IRA arrangement credit determined under this 
section for any taxable year in the credit period is $500. 
‘‘(b) DEFINITIONS.—For purposes of this section— 
‘‘(1) ELIGIBLE EMPLOYER.—The term ‘eligible 
employer’ means, with respect to the calendar year 
in which the taxable year begins, an employer 
which— 
‘‘(A)(i) facilitates an automatic IRA ar-
rangement (as defined in section 414(dd)(8)), 
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or an arrangement described in 4980J(a)(2), 
and 
‘‘(ii) is described in 408(p)(2)(C)(i), and 
‘‘(B) did not maintain an eligible employer 
plan during the portion of the calendar year 
preceding the commencement of such arrange-
ment and the 2 preceding calendar years. 
‘‘(2) CREDIT PERIOD.—The term ‘credit period’ 
means the first 3 calendar years beginning after the 
date of the enactment of this section in which the 
eligible employer participates in the arrangement. 
‘‘(3) ELIGIBLE
EMPLOYER
PLAN.—The term 
‘eligible employer plan’ means a qualified employer 
plan within the meaning of section 4972(d). 
‘‘(c) OTHER RULES.—For purposes of this section, 
rules similar to the rules of section 45E(e)(2) shall 
apply.’’. 
(b) CREDIT ALLOWED AS PART OF GENERAL BUSI-
NESS CREDIT.—Section 38(b) is amended by striking 
‘‘plus’’ at the end of paragraph (40), by striking the period 
at the end of paragraph (41) and inserting ‘‘, plus’’, and 
by adding at the end the following new paragraph: 
‘‘(42) the small employer automatic IRA ar-
rangement 
credit 
determined 
under 
section 
45BB(a).’’. 
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(c) SPECIFIED CREDIT
FOR PURPOSES
OF CER-
TIFIED PROFESSIONAL EMPLOYER ORGANIZATIONS.— 
Section 3511(d)(2) of such Code is amended by redesig-
nating subparagraphs (G), (H), and (I) as subparagraphs 
(H), (I), and (J), respectively, and by inserting after sub-
paragraph (F) the following new subparagraph: 
‘‘(G) section 45BB (small employer auto-
matic IRA arrangement credit),’’. 
(d) CLERICAL AMENDMENT.—The table of sections 
for subpart D of part IV of subchapter A of chapter 1 
is amended by adding at the end the following new item: 
‘‘Sec. 45BB. Credit for certain small employer automatic IRA arrangements.’’. 
(e) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2025. 
SEC. 4. TREATMENT OF AUTOMATIC IRA ARRANGEMENTS 
UNDER STATE LAW. 
(a) PREEMPTION OF STATE LAW.—This Act, and the 
amendments made thereby, shall supersede any law of a 
State which would directly or indirectly prohibit or restrict 
an automatic IRA arrangement (as defined in section 
414(dd)(8) of the Internal Revenue Code of 1986). 
(b) EMPLOYERS MAINTAINING AUTOMATIC IRA AR-
RANGEMENT.— 
(1) IN GENERAL.—Any employer maintaining 
such an arrangement shall not be subject to any re-
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