2026 -- H 8189

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LC005303

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     STATE OF RHODE ISLAND

IN GENERAL ASSEMBLY

JANUARY SESSION, A.D. 2026

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A N   A C T

RELATING TO TAXATION -- EMPLOYER TAX CREDITS FOR RETIREMENT PLAN

ESTABLISHMENT, PARTICIPATION AND AUTO-ENROLLMENT

     Introduced By: Representative Alex S. Finkelman

     Date Introduced: February 27, 2026

     Referred To: House Finance

     It is enacted by the General Assembly as follows:

     SECTION 1. Legislative Findings and Purpose

     The General Assembly finds that:

     (1) A substantial number of Rhode Island workers lack access to employer-sponsored

retirement plans;

     (2) Small employers face disproportionate financial and administrative barriers in

establishing and maintaining retirement plans;

     (3) The federal Setting Every Community Up for Retirement Enhancement Act of 2019, as

amended (“SECURE Act”), established tax incentives to encourage small employers to adopt

retirement plans, increase employee participation, and implement automatic enrollment features;

and

     (4) Aligning state tax incentives with federal retirement policy will expand coverage,

increase savings rates, and strengthen the long-term financial security of Rhode Island workers.

     It is therefore the purpose of this act to encourage the establishment and maintenance of

employer-sponsored retirement plans by providing tax credits tied to employee participation and

automatic enrollment, consistent with federal law.

     SECTION 2. Title 44 of the General Laws entitled "TAXATION" is hereby amended by

adding thereto the following chapter:

CHAPTER 55.1

EMPLOYER TAX CREDITS FOR RETIREMENT PLAN ESTABLISHMENT,

PARTICIPATION, AND AUTO-ENROLLMENT

     44-55.1-1. Definitions.

     As used in this chapter:

     (1) “Automatic enrollment feature” means a feature of a qualified retirement plan under

which eligible employees are automatically enrolled at a specified contribution rate unless the

employee affirmatively elects otherwise, consistent with the Internal Revenue Code.

     (2) “Eligible costs” means ordinary and necessary costs paid or incurred by an eligible

employer in connection with:

     (i) The establishment or administration of a qualified retirement plan; and

     (ii) Employer contributions or matching contributions made on behalf of eligible

employees.

     (3) “Eligible employee” means an employee who:

     (i) Is employed by an eligible employer;

     (ii) Meets the eligibility requirements of the qualified retirement plan; and

     (iii) Participates in the plan during the taxable year through elective deferrals or on whose

behalf employer contributions are made.

     (4) “Eligible employer” means an employer that:

     (i) Employed one hundred (100) or fewer employees who received at least five thousand

dollars ($5,000) in compensation during the preceding taxable year; and

     (ii) Did not maintain a qualified retirement plan covering substantially the same employees

during the three (3) taxable years preceding the first taxable year for which a credit is claimed,

except as otherwise permitted under applicable federal law.

     (5) “Qualified retirement plan” means a retirement plan described in the Internal Revenue

Code and eligible for favorable federal tax treatment including, but not limited to, plans described

in §§ 401(a), 401(k), 403(b), 408(k), or 408(p).

     (6) “Tax credit” means a credit allowed against Rhode Island income tax pursuant to this

chapter.

     44-55.1-2. Retirement plan participation credit.

     (a) An eligible employer shall be allowed a nonrefundable credit against its tax liability

imposed under chapters 11, 14, 15, or 30 of title 44, for each taxable year in which one or more

eligible employees participate in a qualified retirement plan.

     (b) The credit attributable to any eligible employee shall not exceed one hundred dollars

($100) per employee per taxable year, and the aggregate credit allowed to any eligible employer

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shall not exceed ten thousand dollars ($10,000) per taxable year.

     (c) No credit shall be allowed under this section for costs attributable to employees who do

not participate in the qualified retirement plan during the taxable year.

     (d) The credit allowed under this section shall not reduce a taxpayer’s liability below the

minimum tax imposed under the applicable chapter of this title.

     44-55.1-3. Auto-enrollment enhancement credit.

     (a) In addition to the credit allowed under § 44-55.1-2, an eligible employer that includes

an automatic enrollment feature in its qualified retirement plan shall be allowed an additional

nonrefundable credit against its tax liability.

     (b) The auto-enrollment enhancement credit shall be determined on a per–eligible

employee basis for each eligible employee subject to automatic enrollment during the taxable year.

     (c) The credit allowed under this section shall not exceed one hundred dollars ($100) per

eligible employee per taxable year, subject to an aggregate annual cap of one thousand dollars

($1,000) per eligible employer.

     (d) The auto-enrollment enhancement credit may be claimed for up to three (3) consecutive

taxable years beginning with the first taxable year in which the automatic enrollment feature is

implemented.

     (e) No credit shall be allowed under this section unless the automatic enrollment feature

complies with applicable requirements of the Internal Revenue Code.

     (f) The credit allowed under this section shall not reduce a taxpayer’s liability below the

minimum tax imposed under the applicable chapter of this title.

     44-55.1-4. Nondiscrimination; coordination with other credits.

     (a) A qualified retirement plan for which a credit is claimed under this chapter shall be

offered on a nondiscriminatory basis, consistent with the requirements of the Internal Revenue

Code.

     (b) No credit shall be allowed under this chapter for any eligible costs that are used by the

taxpayer to claim any other credit, deduction, or incentive under this title.

     (c) If a taxpayer is liable for tax under both chapters 14 and 15 of title 44, the taxpayer shall

elect the chapter under which the credit shall be applied, and the credit shall be applied to only one

chapter for the taxable year.

     44-55.1-5. Pass-through entities.

     If the eligible employer is a pass-through entity including, but not limited to, a partnership,

limited liability company, or S corporation, the tax credit allowed under this chapter shall be passed

through to the owners, partners, or members in the same manner as income, in proportion to their

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ownership interests.

     44-55.1-6. Carryforward of unused credit.

     Any unused portion of a credit allowed under this chapter may be carried forward for up

to three (3) consecutive taxable years, subject to regulations adopted pursuant to this chapter.

     44-55.1-7. Coordination with federal law.

     (a) This chapter shall be interpreted and administered, to the extent practicable, in a manner

consistent with the federal Setting Every Community Up for Retirement Enhancement Act, as

amended.

     (b) In the event of a conflict between this chapter and applicable federal law governing

qualified retirement plans, federal law shall control.

     44-55.1-8. Reporting and evaluation.

     The tax administrator shall annually report to the general assembly the number of taxpayers

claiming the credit, the total amount of credits claimed, and any other information necessary to

evaluate the fiscal and economic impact of the credit, consistent with § 44-48.2.

     44-55.1-9. Regulations.

     The tax administrator, in consultation with the office of the general treasurer, shall

promulgate rules and regulations necessary to implement and administer the provisions of this

chapter.

     SECTION 3. This act shall take effect for taxable years beginning on or after January 1,

2027.

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EXPLANATION

BY THE LEGISLATIVE COUNCIL

OF

A N   A C T

RELATING TO TAXATION -- EMPLOYER TAX CREDITS FOR RETIREMENT PLAN

ESTABLISHMENT, PARTICIPATION AND AUTO-ENROLLMENT

***

     This would establish employer tax credits for establishing a retirement plan for employee

participation with auto-enrollment.

     This act would take effect for taxable years beginning on or after January 1, 2027.

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