President Obama is proposing that the tax credit employers receive for offering a retirement plan be doubled.
Under Obama’s proposed budget, which was released on Feb. 1, small employers who begin offering a retirement plan could receive a $1,000 tax credit for three years.
Under the current law, the maximum credit is $500 a year for three years.
The new pension plan startup credit would be effective after Dec. 31, 2011. The increase is meant to work with Obama’s new direct-deposit Individual Retirement Account (IRA) proposal to help employees be more financially secure when they retire.
The IRA plan would require employers who don’t offer a pension plan to implement a direct-deposit IRA and automatically enroll employees in it, unless they opt out. Employers with 10 or fewer workers would be exempt.
In addition, Obama has proposed a tax credit in which the government would match 50% of the first $1,000 of contributions by families that earn up to $65,000 and a partial tax credit to those earning up to $85,000.
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