Incentivizing Small Business Retirement Savings Act
Bill: S.4153 | Sponsor: Sen. Hickenlooper, John W. (D-CO)
Policy area: Taxation

Summary:
Incentivizing Small Business Retirement Savings Act
This bill allows eligible small employers an additional pension plan startup cost tax credit for a specified percentage of their contributions to an pension plan established for the benefit of their non-highly compensated employees. The amount of such credit may not exceed $1,000 per employee and is subject to a phaseout if the employer has more than 50 employees.

To amend the Internal Revenue Code of 1986 to enhance the credit for 
               small employer pension plan startup costs.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Incentivizing Small Business 
Retirement Savings Act''.

SEC. 2. CREDITS FOR EMPLOYER CONTRIBUTIONS BY CERTAIN ELIGIBLE 
              EMPLOYERS.

    (a) In General.--Section 45E of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(f) Additional Credit for Employer Contributions by Certain 
Eligible Employers.--
            ``(1) In general.--In the case of an eligible employer, the 
        credit allowed for the taxable year under subsection (a) 
        (determined without regard to this subsection, and after the 
        application of subsection (b)) shall be increased by an amount 
        equal to the applicable percentage of employer contributions 
        (other than any elective deferrals (as defined in section 
        402(g)(3))) made by the employer to an eligible employer plan 
        (other than a defined benefit plan (as defined in section 
        414(j))) for the taxable year.
            ``(2) Limitations.--
                    ``(A) Dollar limitation.--The amount determined 
                under paragraph (1) (before the application of 
                subparagraph (B)) with respect to any employee of the 
                employer shall not exceed $1,000.
                    ``(B) Credit phase-out.--With respect to any 
                taxable year, the $1,000 amount under subparagraph (A) 
                shall be reduced by 2 percent for each employee by 
                which the number of employees of the employer for the 
                preceding taxable year exceeds 50.
                    ``(C) Only non-highly compensated employees taken 
                into account.--For purposes of paragraph (1), only 
                contributions with respect to employees who are not 
                highly compensated employee (as defined in section 
                414(q)) shall be taken into account.
            ``(3) Applicable percentage.--For purposes of this 
        subsection, the applicable percentage is--
                    ``(A) for the first credit year with respect to the 
                employer for purposes of subsection (b) and the taxable 
                year immediately following such first credit year, 100 
                percent,
                    ``(B) for the 2nd taxable year following such first 
                credit year, 75 percent,
                    ``(C) for the 3rd taxable year following such first 
                credit year, 50 percent,
                    ``(D) for the 4th taxable year following such first 
                credit year, 25 percent, and
                    ``(E) zero percent thereafter.''.
    (b) Disallowance of Deduction.--Section 45E(e)(2) of the Internal 
Revenue Code of 1986 is amended to read as follows:
            ``(2) Disallowance of deduction.--No deduction shall be 
        allowed--
                    ``(A) for that portion of the qualified startup 
                costs paid or incurred for the taxable year which is 
                equal to so much of the portion of the credit 
                determined under subsection (a) as is properly 
                allocable to such costs, or
                    ``(B) for that portion of the employer 
                contributions made by the employer for the taxable year 
                which is equal to so much of the credit increase 
                determined under subsection (f) as is properly 
                allocable to such contributions.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
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