House introduces new bill to help small nonprofits offer retirement plans
On Monday, Congressman Vern Buchanan, Vice Chairman of the House Ways and Means Committee, introduced the bipartisan bill, which would help small nonprofit organizations offer retirement plans by extending those federal tax incentives currently available only to for-profit employers.
“Every American deserves the opportunity to save for retirement, including the millions who are dedicating their lives to charitable work,” said Buchanan. His new bill gives non-profit employers “the same tools as small for-profit businesses to offer retirement plans to their employees. More Americans will be able to build financial security for the future, and nonprofits will gain another way to invest in their workforce. I’m committed to helping hardworking Americans keep more of what they earn so they can retire with peace of mind and financial independence.”
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“America’s nonprofit workforce, which accounts for a $65 billion payroll, was overlooked in the SECURE 2.0 Act because the generous tax credits designed to help organizations establish plans were only made available to for-profit entities,” said George Guerrero, CEO of Just Futures. The Small Nonprofit Retirement Security Act of 2024 “seeks to correct this oversight and would extend the valuable retirement plan subsidies, through payroll tax credits, to nonprofit organizations.”
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The new bill provides up to $5,000 per year in tax credits (for the first three years) to help nonprofits launch retirement plans, plus an additional $500 annually for those that adopt auto-enrollment. To ensure nonprofits can fully benefit, the credits can be applied directly to their payroll tax liability.
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“Many small nonprofits struggle to offer retirement plans due to cost and limited access. This legislation extends critical startup and auto-enrollment tax credits to nonprofits the same as for-profit businesses, allowing them to attract and retain talented employees,” said Senator James Lankford (R-OK), who introduced companion legislation in the Senate in 2024.
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“This bipartisan legislation will reduce the barriers that nonprofits face in creating retirement accounts for their employees, leveling the playing field between nonprofit and for-profit organizations,” said Senator Cortez Masto, co-sponsor of the bill in the Senate.
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“Small, local non-profit organizations are often on the frontlines of serving our communities. This is especially true in Utah, where the vast majority of nonprofits have fewer than 50 employees. Allowing these organizations access to the same retirement credits as small businesses will help them recruit and retain employees,” said Rep. Blake Moore (R-UT), who co-sponsored the bill.
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“Small, community-based nonprofits are lifelines in our communities, providing critical services such as free meals, emergency housing, and child care assistance. These vital organizations employ 10% of the American workforce, but, because of their tax-exempt status, they are unable to take advantage of existing incentives in our tax code that help private employers offer retirement plans for their employees,” said Rep. Brad Schneider (D-IL), who co-sponsored the bill.
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The legislation is supported by the American Retirement Association: “One out of 10 U.S. workers is employed by a nonprofit organization. Most of them are smaller and do not offer a retirement plan. This legislation will ensure that nonprofits have access to the same tax incentives for starting up a retirement plan that were provided to for-profit small businesses in SECURE 2.0,” said Brian Graff, CEO, American Retirement Association.
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The Small Nonprofit Retirement Security Act “seeks to correct what amounts to an operational oversight of SECURE 2.0, and extends the economics of the tax credits to nonprofit organizations through their respective payroll tax liability,” said Guerrero. The legislation “would give charitable organizations the same incentives made available to for-profit businesses through SECURE 2.0 to provide a retirement plan and to institute an automatic enrollment feature.”
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