S. 2335 — Pensions for All Act

This section establishes definitions for terms used in the Act, including (1) covered retirement program, as a retirement program other than FERS that the Secretary of Labor determines provides benefits comparable to FERS for an employee (as defined in 5 U.S.C. §8401 on the day before enactment); (2) employee and employer, as defined in ERISA §3 (29 U.S.C. §1002); (3) FERS, as the Federal Employees Retirement System under 5 U.S.C. chapter 84; and (4) Secretary, as the Secretary of Labor.

This section requires each employer to either make available to employees a covered retirement program or notify the Secretary that its employees will participate in the Federal Employees Retirement System (FERS), and requires each self-employed individual to either enroll in such a program or notify the Secretary of FERS participation. It further authorizes employers and self-employed individuals, at a frequency of not less than annually as determined by the Secretary in coordination with the Director of the Office of Personnel Management, to elect to switch between (1) ceasing contributions to or participation in a covered retirement program and instead participating in FERS or (2) ceasing FERS participation and instead offering or enrolling in a covered retirement program.

This section expands the Federal Employees Retirement System (FERS) to include (1) covered non-Federal employees, defined as individuals employed by a covered non-Federal employer (i.e., a non-Federal employer without a retirement plan determined by the Secretary of Labor to provide benefits comparable to FERS) and (2) covered self-employed individuals (i.e., self-employed individuals not enrolled in such a comparable plan). It revises the definition of basic pay to mean, for covered self-employed individuals, their annual income attributable to such activities (retaining the section 8331(3) definition otherwise); adds their post-enactment service as creditable for annuity eligibility; requires covered non-Federal employers to withhold employee contributions from basic pay at standard FERS rates (with covered self-employed individuals responsible for depositing equivalent amounts); and imposes employer contributions on covered non-Federal employers and covered self-employed individuals, reduced to 50% of the normal amount for covered non-Federal employers with annual revenue of not more than $25 million (with graduated increases based on revenue exceeding $25 million) and similarly scaled for covered self-employed individuals based on basic pay exceeding $75,000. (Thus, these participants gain access to FERS annuities, which supplement Social Security and Thrift Savings Plan benefits available to federal civilian employees.)

This section establishes a new tax credit under IRC §36A (inserted after §36) for eligible taxpayers equal to 50% (reduced proportionately but not below zero for employers with gross receipts over $25 million or self-employed individuals with income over $75,000) of qualified pension contributions to covered retirement programs. Qualified contributions include, for covered non-Federal employers and covered self-employed individuals (as defined in 5 U.S.C. §8401 electing no reduction in contributions), those under FERS §§8423(a) and 8432(c); for other employers, nonelective contributions to a covered retirement program (as defined in sec. 2 of the Pensions for All Act); and for other self-employed individuals, contributions to such a program. For employers, the credit is part of the general business credit under IRC §38(b)(42) (new par.), with no double deduction or credit allowed; conforming amendments are made to IRC §6211(b)(4)(A) and the table of sections for subpart C of part IV of subchapter A of chapter 1. Applies to contributions after enactment.

This section establishes a new excise tax under IRC §4980J on (1) employers that fail to make available a covered retirement program (as defined in the Pensions for All Act) to all employees or, if covered employers, to make required contributions under 5 U.S.C. §§8423(a) and 8432(c); and (2) self-employed individuals that fail to participate in such a program or make such contributions if covered self-employed individuals. The tax equals $10 per day per employee or self-employed individual during the noncompliance period (i.e., from the failure's start until correction or, for employers, three months after employment ends), adjusted for inflation after 2026; unintentional failures are capped at $500,000 per taxable year (with waiver authority), and no tax applies to undiscovered failures despite reasonable diligence (effective for plan years beginning after December 31, 2025).

This section prohibits an employer from reducing any form of compensation provided to an employee employed on or before the date of enactment due to the requirement under this Act that the employee be enrolled in a covered retirement program or FERS.