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New Tax Credit Under Obama's New IRA Plan

by Mike Godfrey, Tax-News.com, Washington

27 January 2016


The White House has issued a factsheet on President Barack Obama's plans to expand access to US workplace individual retirement accounts, including the introduction of a new tax credit.

President Obama's proposals, which will be included in his upcoming draft fiscal year 2017 Budget, "aim to ensure near universal access to workplace retirement savings accounts and put [the United States] on a path to more portable retirement benefits."

The White House points out that one in three workers does not have access to a retirement savings plan, including half of workers at firms with fewer than 50 employees. The plan is intended to encourage more small businesses to offer IRAs and make it easier for workers to participate.

Small businesses would be able to come together and create pooled IRAs at a lower cost, and they would also be provided with a tax credit of USD1,500 per year for up to three years if they begin to offer retirement plans.

Because it is thought that auto-enrollment is the most effective way to encourage workers with access to a retirement plan to participate, small employers that already offer an IRA and add auto-enrollment would also get a tax credit of USD500 per year for up to three years.

TAGS: individuals | tax | investment | small business | business | pensions | employees | retirement | tax credits | United States

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