HR7556-119

What This Bill Does

This bill creates a universal retirement-coverage framework tied to the Federal Employees Retirement System. Employers must make a covered retirement program available to all employees or notify the Secretary of Labor that their employees will participate in FERS. Self-employed individuals must enroll in a covered retirement program or choose FERS participation. Covered non-federal employers and covered self-employed individuals become part of the FERS and Thrift Savings Plan contribution architecture: employers with revenue up to $25 million and self-employed individuals with income up to $75,000 pay 50 percent of otherwise applicable contributions, with phaseups through $100 million of revenue or $125,000 of income; Treasury credits the reduced contribution amounts to the Thrift Savings Fund. A new section 36A tax credit covers up to 50 percent of qualified pension contributions, phased down over the same revenue and income ranges, and denies double benefits. Employers and self-employed people who fail to maintain a covered retirement program, participate in FERS, or make required contributions face a $10-per-day excise tax per employee or individual, inflation adjusted after 2026, with caps and waivers for reasonable cause. Employers also may not reduce compensation because an employee is enrolled in a covered retirement program or FERS.

Who Benefits and How

Employees without comparable retirement coverage, covered non-federal employees, self-employed individuals, small employers, and lower-income self-employed workers benefit from either FERS participation, comparable private retirement coverage, Treasury-backed contribution reductions, and a pension-contribution tax credit.

Who Bears the Burden and How

Employers, covered non-federal employers, self-employed individuals, the Department of Labor, Treasury, OPM, IRS, and the Thrift Savings Plan must administer coverage elections, contribution withholding, crediting, tax credits, excise taxes, regulations, and compensation-protection rules. Employers that fail to offer coverage or make contributions face a $10-per-day penalty.

Key Provisions

• Requires employers to offer a FERS-comparable retirement program or elect FERS participation for employees.
• Requires self-employed individuals to enroll in a covered retirement program or elect FERS participation.
• Expands FERS and Thrift Savings Plan contribution rules to covered non-federal employers and covered self-employed individuals.
• Provides reduced contribution formulas and Treasury credits for smaller employers and lower-income self-employed participants.
• Creates a section 36A tax credit for small employer and self-employed pension contributions.
• Imposes a $10-per-day excise tax for failing to maintain required retirement coverage and bars compensation reductions.