H.R. 8837 — RISE Act

This section increases the small employer pension plan startup cost credit to 100 percent of qualified startup costs (from 50 percent) and raises the base annual limit to $2,500 (from $500) for the first three years for qualified microemployers. The enhanced credit applies only to employers with 10 or fewer employees whose plans accept matching contributions under section 6433 and takes effect for taxable years beginning after December 31, 2026.

This section allows eligible service providers that reduce their fees by the credit amount to claim the small business pension plan startup credit under section 45E for the first three taxable years after a plan becomes effective, instead of the eligible employer. The credit equals the amount the employer would have received, subject to the same limits, and requires written employer certification on employee counts, prior plan history, and non-claim status; employers may not claim the credit if a provider does, the fee reduction is excluded from employer income and nondeductible for the provider, and overclaimed amounts trigger recapture. The changes apply to taxable years beginning after December 31, 2026.