RISE Act
- Sponsor
- Rep. Tenney, Claudia [R-NY-24]
- Committees
- Ways and Means Committee (primary)
- Last action
- May 14, 2026
Bottom line
The RISE Act seeks to boost retirement plan adoption among the smallest businesses by increasing startup tax credits and making them assignable to service providers, potentially lowering upfront costs for employers.
What it actually does
This bill amends the Internal Revenue Code of 1986 to enhance the tax credit for small business retirement plan startup costs for 'microemployers' (those with 10 or fewer employees) by increasing the credit rate to 100% and the maximum credit amount to $2,500. Additionally, it allows eligible retirement plan service providers to claim these startup tax credits directly, provided they reduce the fees charged to the small business employer by an equivalent amount and obtain specific certifications from the employer. The bill aims to reduce the financial and administrative burden for small businesses to establish retirement plans.
Proponents argue
Supporters argue that the bill will significantly lower the barriers for microemployers to offer retirement plans, encouraging more small businesses to provide their employees with access to workplace savings. By allowing service providers to claim the credit, proponents believe it simplifies the process for employers and ensures the financial benefit is realized immediately through reduced fees, rather than waiting for tax filing. This could lead to increased retirement savings for millions of employees in small businesses.
Opponents contend
Critics may contend that while the intent is good, the bill adds complexity to the tax code and could create new administrative burdens for the IRS in verifying certifications and ensuring compliance. Concerns might also be raised about whether service providers will genuinely pass on the full value of the credit to employers, or if the system could be gamed. There could also be arguments about the overall cost to taxpayers for these expanded credits without a clear demonstration of their effectiveness in significantly increasing retirement plan participation.
The bill is short and relatively straightforward, making it accessible for a quick read and evaluation.
Section 2(a), amending Section 45E(g)
Microemployer Pension Plan Startup Credit Enhancement
This provision increases the existing small business retirement plan startup credit for 'qualified microemployers.' Instead of receiving a 50% credit, microemployers will receive a 100% credit for eligible startup costs. The maximum annual credit amount is also raised from $500 to $2,500. A 'qualified microemployer' is defined as an employer with 10 or fewer employees, provided their plan accepts matching contributions under a specified (but undefined in this bill) Section 6433.
Supporters argue
Supporters argue that this enhanced credit directly addresses the financial hurdles faced by the smallest businesses, making it significantly more attractive for them to establish retirement plans. The 100% credit and higher cap can effectively eliminate initial setup costs, which are often a major deterrent.
Critics contend
Critics might suggest that while the credit is increased, the administrative burden of setting up and maintaining a plan might still be too high for microemployers, limiting the actual impact. They may also point to the cost to taxpayers for a potentially limited return on investment if participation doesn't significantly increase.
Tradeoffs
The provision balances the goal of incentivizing small business retirement plans against the cost to federal revenue. It also attempts to target the smallest businesses, which often face the greatest resource constraints, but relies on a future or external definition of 'matching contribution under section 6433' which introduces some ambiguity.
Section 3(a), amending Section 45E(h)
Assignment of Small Business Pension Plan Startup Credits to Service Providers
This provision allows eligible retirement plan service providers (e.g., recordkeepers, administrators) to claim the small business pension plan startup tax credit directly, instead of the employer. To do so, the service provider must reduce the fees charged to the eligible employer by an amount at least equal to the credit. The employer must provide a written certification confirming they will not claim the credit, have not maintained a similar plan recently, and other details. This aims to provide immediate cost savings to employers by reducing upfront fees, rather than requiring them to claim a credit on their tax return.
The definition of a 'qualified microemployer' includes a condition that the eligible employer plan, 'under the terms of the plan, accepts payment of the matching contribution under section 6433.'
Section 2(g)(2)
Why it matters:This could be standard legislative practice if Section 6433 is an existing, well-understood, or concurrently proposed section of the tax code. However, without that context, it makes the full scope of eligibility for the microemployer credit opaque to a reader relying solely on this bill.
Case for: Allows for coordination with other legislative initiatives or existing tax code provisions related to matching contributions, ensuring consistency and potentially leveraging broader policy goals.
Case against: Creates uncertainty regarding the precise eligibility criteria for the enhanced microemployer credit. Without knowing the content of Section 6433, it's difficult to fully assess which microemployers would truly qualify, potentially limiting the bill's transparency and immediate impact assessment.
Estimated impact: The impact is unknown without the definition of Section 6433. It could significantly narrow or broaden the pool of eligible microemployers, thereby altering the fiscal cost and reach of the enhanced credit.
A 'recapture' provision states that if an eligible entity (service provider) receives a credit greater than what the eligible employer would have been allowed (e.g., due to the employer not being eligible or incorrect certification), the service provider's tax for that year shall be increased by the excess amount.
Section 3(h)(8)
Why it matters:It's standard legislative practice to place enforcement and penalty provisions at the conclusion of the relevant section. While critical for compliance, it's not part of the primary benefit description.
Case for: This provision is essential for preventing fraud and ensuring the integrity of the tax credit program. It holds service providers accountable for verifying employer eligibility and certifications, thereby protecting taxpayer funds.
Case against: Service providers might argue that this provision places an undue burden on them to verify employer information, potentially exposing them to significant financial penalties for errors outside their direct control. This could discourage some providers from participating in the program.
Estimated impact: Reduces the potential for erroneous or fraudulent claims of the assigned tax credit, thereby safeguarding federal revenue. The actual financial impact depends on the frequency and scale of such incorrect claims.