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Need to know: RISE Act Could Boost Startup Tax Credits for Small Business Retirement Plans


Small businesses have long faced a steep uphill climb when it comes to offering retirement benefits, despite the growing importance of helping employees save for the future. A newly introduced bipartisan bill, known as the Retirement Investment in Small Employers (RISE) Act, aims to change that by expanding tax credits that cover the cost of starting a retirement plan.


Introduced in the U.S. Senate on May 21, 2025, the RISE Act builds on the groundwork laid by the SECURE Act of 2019 and SECURE 2.0 of 2022—both of which expanded incentives for small employers to establish retirement plans. The new proposal focuses specifically on micro-employers, further easing the cost of entry for businesses with 10 or fewer employees.


What the RISE Act Proposes

Under current law, employers with 50 or fewer employees may be eligible for a startup tax credit equal to 100% of qualified plan startup costs, capped at $5,000 per year for up to three years. The original SECURE Act established a minimum credit of $500, calculated as 50% of startup costs, with a maximum of $250 per eligible non-highly compensated employee.


The RISE Act (S.1840) would revise the rules in the following way:

  • For businesses with 10 or fewer employees, the startup tax credit would no longer be based on a per-employee calculation.

  • Instead, the bill proposes a flat minimum credit of $2,500—guaranteed, regardless of how few employees the business has.


This is particularly beneficial for sole proprietors, family businesses, and small partnerships that might otherwise fall below the threshold needed to make existing tax credits worthwhile.


A Simple Way to Offset Plan Costs

For many micro-employers, the cost of setting up a 401(k) or other defined contribution plan, along with ongoing administrative fees, can be a deterrent. The RISE Act directly addresses that concern by offering budget certainty and a meaningful reduction in out-of-pocket expenses during the first few years of a plan’s life.

In many cases, the $2,500 credit could fully cover the administrative fees associated with setting up a retirement plan, especially when working with a third-party administrator (TPA) who provides bundled services and compliance support.


Why It Matters for Your Business

This bill is a recognition of the role small businesses play in closing America’s retirement savings gap. By making plan adoption more financially viable, the RISE Act could increase the number of small employers offering plans—and give employees more opportunities to save through payroll deductions.

If the bill is passed, it would make retirement plan startup credits more predictable and generous for the smallest employers—those who often need it most. The proposal has been referred to the Senate Finance Committee for further consideration.


How We Can Help

If you're a small business owner or advisor evaluating whether now is the right time to start a retirement plan, this is a promising development to keep on your radar. At Robin S. Weingast & Associates, we specialize in helping employers design and administer plans that fit their unique needs and budgets, from startup through compliance and beyond.


We’ll be watching the progress of the RISE Act closely and are here to help you take advantage of existing credits, even as new opportunities emerge.


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