Boosting Retirement Options for Nonprofits

Just last week, a brand new piece of laws aimed toward empowering smaller nonprofit organizations to supply retirement plans made its debut in Congress.

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A Collaborative Effort

In a show of cross-party cooperation, U.S. Representatives Vern Buchanan (R-FL), Jimmy Panetta (D-CA), Blake Moore (R-UT), and Brad Schneider (D-IL), teamed up with Senators James Lankford (R-OK) and Catherine Cortez Masto (D-NV). Together, they rolled out a bicameral, bipartisan initiative that seeks to increase federal tax incentives to nonprofit organizations—advantages which have historically been reserved for his or her for-profit counterparts.

A Level Playing Field for Nonprofits

“Every American deserves the chance to save for retirement, including those tirelessly working in the nonprofit sector,” Buchanan identified. “This sensible bill provides nonprofits with the same advantages as small for-profit businesses to create retirement plans for their teams. Not only will this help more Americans secure their financial futures, but it will also offer nonprofits a new way to invest in their staff. I am committed to ensuring hardworking citizens keep more of what they earn, paving the way for a financially secure retirement.”

Breaking Down Barriers

Under the present setup, tax-exempt organizations miss out on small business retirement plan start-up credits outlined within the SECURE Act, just because they don’t pay federal income taxes. Lawmakers argue this puts nonprofits at a drawback on the subject of offering retirement perks. Buchanan’s Small Nonprofit Retirement Security Act goals to alter that by allowing nonprofits to offset these tax credits against their payroll tax obligations, thereby granting them access to those worthwhile retirement incentives.

The proposed laws would offer nonprofits with as much as $5,000 annually in tax credits, with a further $500 for people who implement automatic enrollment. These credits may be directly applied to their payroll tax liabilities.

The Big Picture

Nonprofits are a vital a part of the U.S. economy, employing about 10% of the workforce and contributing a powerful $65 billion annually in payroll taxes.

A Boost for Local Nonprofits

“Small, local nonprofit organizations often serve as the backbone of our communities. This is particularly true in places like Utah, where most nonprofits have fewer than 50 employees,” Moore explained. “By granting these organizations access to the same retirement credits as small businesses, we help them attract and retain employees, allowing them to continue their invaluable service to the community.”

Support and Endorsement

The laws has garnered support from the American Retirement Association, underscoring its potential impact on the nonprofit sector.

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