H.R. 5887 — Saving for the Future Act

This section states congressional findings on retirement savings, including that (1) 3 out of 10 private-sector workers lack access to any workplace retirement plan, according to a 2023 Bureau of Labor Statistics report; (2) 48 percent of households age 55 and older have no retirement savings in a defined contribution plan or individual retirement account, and nearly 30 percent of such households have no retirement savings and no defined benefit plan, according to a Government Accountability Office study; and (3) 28 percent of non-retirees have no retirement savings and 60 percent of non-retirees with self-directed retirement accounts have low confidence in their investment decisions, according to a 2022 Federal Reserve report.

This section establishes a new part 8 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 (ERISA) concerning universal personal savings, requiring applicable employers (those with at least 10 full-time equivalent employees for not less than two years) to contribute specified minimum amounts on behalf of employees not enrolled in an active defined benefit pension plan sponsored by the employer. Contributions begin in the first full taxable year after enactment at $0.50 per hour worked for each full-time employee for the first two years, increase to $0.60 per hour for the next two years, and are indexed to growth in average nonsupervisory wages every three years thereafter; noncompliance requires payment plus interest set by the Secretary of Labor. Applicable employers must provide a qualifying pension plan, which for employers with 100 or more full-time equivalent employees must be an employer-sponsored plan such as a 401(k) plan, defined benefit plan, or other plan under specified Internal Revenue Code provisions, and for smaller applicable employers may include SIMPLE retirement accounts, automatic payroll deduction IRAs, state-facilitated plans, or UP Accounts; employers offering state programs without their own contributions must provide UP Retirement Accounts for the employer contributions. Employers with fewer than 10 workers must provide employees a standard notice developed by the Board upon hire and annually, with instructions for setting up accounts and claiming the section 25BB individual tax credit. This section further establishes the Federal Universal Personal Savings Investment Board as an independent agency to oversee UP Accounts, consisting of five presidentially appointed members (with Senate confirmation) having expertise in financial investments and pension plans who serve staggered initial terms of 1-5 years (renewable once for five years each) and hire an Executive Director.

This section modifies the tax credit for small employer pension plan startup costs (IRC §45E) for taxable years beginning after enactment by (1) increasing the maximum credit amount to $2,000 (from $500), (2) expanding eligibility to employers with no more than 250 employees who received at least $5,000 in compensation (from 100), and (3) excluding employers subject to ERISA §802(a)(1) minimum contribution requirements that failed to make any required contribution within the time prescribed by the Secretary for the taxable year or any of the prior four taxable years.

This section establishes a new general business tax credit under new IRC §45BB for an eligible employer's qualified retirement contributions (i.e., minimum required contributions to multiemployer pension plans under ERISA §802, or equivalent amounts for employers not subject to that requirement). The credit equals 50% of such contributions with respect to no more than 15 employees (or full-time equivalents) and 25% with respect to more than 15 but no more than 30 employees; it excludes employers that fail to make required contributions in the taxable year or any of the prior four taxable years, denies the credit if claimed with the small employer pension startup credit under §45E, and treats the credit as refundable for tax-exempt employers against payroll taxes (i.e., employee income tax withholding, employee Medicare tax, and employer Medicare tax). This section also appropriates to the Federal Old-Age and Survivors Insurance Trust Fund and Federal Disability Insurance Trust Fund (established under SSA §201) amounts equal to revenue losses to the Treasury from IRC §45AA(f), with transfers from the general fund timed to replicate prior inflows. The amendments apply to taxable years beginning after enactment.

This section establishes a new nonrefundable tax credit under new IRC section 25BB equal to 50% of an eligible individual's qualified retirement contributions (i.e., cash contributions to an individual retirement account or a universal pension account under ERISA §805) for the taxable year, not to exceed a base amount equal to the annual limit under ERISA §802(a)(3)(i). Eligible individuals are those whose employer does not offer a defined benefit or defined contribution plan or universal pension account participation (or who are unemployed); the credit coordinates with the existing saver's credit under section 25B (i.e., each is calculated independently) and applies to taxable years beginning after enactment.

This section increases the highest marginal individual income tax rate to 39.6% (from 37%) in the rate tables for all filing statuses, for taxable years beginning after December 31, 2024.

This section increases the corporate income tax rate to 23 percent (from 21 percent) for taxable years beginning after December 31, 2024.