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S 2365

Small Nonprofit Retirement Security Act of 2025

119th Congress Introduced by Jim Banks and 2 co-sponsors

The Small Nonprofit Retirement Security Act boosts retirement savings for small nonprofits by offering tax credits for pension plan startup costs and auto-enrollment features.

Introduced in Senate
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WeVote Research Nonpartisan
Bill Summary · S 2365

Summary of S. 2365 - Small Nonprofit Retirement Security Act of 2025

Bill Information:
- Bill Number: S. 2365
- Title: Small Nonprofit Retirement Security Act of 2025
- Status: Introduced in Senate
- Introduced: July 21, 2025
- Sponsors:
- Primary: James Lankford
- Cosponsor: Catherine Cortez Masto
- Related Bills: HR 4548 (companion)

Purpose and Intent

The Small Nonprofit Retirement Security Act of 2025 aims to enhance retirement savings options for small tax-exempt employers, such as nonprofits. By amending the Internal Revenue Code, the bill seeks to make specific tax credits available to these organizations, thereby encouraging them to establish pension plans and implement auto-enrollment features for their employees.

Key Provisions

The bill introduces several significant changes to the Internal Revenue Code of 1986:

  1. Credit for Small Employer Pension Plan Startup Costs:

    • Tax-exempt eligible employers will be able to claim a credit for startup costs associated with establishing pension plans.
    • The credit amount will be the lesser of:
      • The amount determined under the existing credit provisions.
      • The total payroll tax paid by the employer during the taxable year.

  2. Retirement Auto-Enrollment Credit:

    • Similar to the startup costs credit, tax-exempt eligible employers can claim a credit for implementing auto-enrollment features in their retirement plans.
    • The credit will also be limited to the lesser of the calculated credit or the payroll taxes paid.

  3. Payroll Credit:

    • A new payroll credit will be established for tax-exempt eligible employers, allowing them to offset payroll taxes based on the credits available under the startup costs and auto-enrollment provisions.
    • The total credit for any calendar year will not exceed the payroll taxes owed by the employer for that year.

  4. Definitions:

    • The bill defines "tax-exempt eligible employer" as an organization described in section 501(c) of the Internal Revenue Code and exempt from taxation under section 501(a).
    • It clarifies what constitutes "payroll tax" for the purposes of these credits.

  5. Effective Date:

    • The amendments will apply to taxable years beginning after December 31, 2024.

Impact

  • Who is Affected:

    • The legislation primarily targets small tax-exempt employers, including nonprofits, which often struggle to provide retirement benefits due to financial constraints.
    • Employees of these organizations may benefit from enhanced retirement savings options.

  • Financial Implications:

    • The bill is designed to incentivize small employers to offer retirement plans, potentially increasing participation in retirement savings among employees of nonprofits.
    • It includes provisions for appropriating funds to the Federal Old-Age and Survivors Trust Fund and the Federal Disability Insurance Trust Fund to offset any revenue reductions resulting from the tax credits.

Procedural Aspects

  • The bill was introduced in the Senate on July 21, 2025, and has been read twice before being referred to the Committee on Finance for further consideration.

This legislation represents a significant step towards improving retirement security for employees of small nonprofit organizations, addressing a critical gap in retirement savings opportunities for this sector.

Compiled from official sources — confirm details with the bill’s official record.

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