[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 6722 Introduced in House (IH)]
<DOC>
119th CONGRESS
1st Session
H. R. 6722
To amend the Internal Revenue Code of 1986 to provide rules for
automatic contribution retirement plans and arrangements.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
December 15, 2025
Mr. Neal introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide rules for
automatic contribution retirement plans and arrangements.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS, ETC.
(a) Short Title.--This Act may be cited as the ``Automatic IRA Act
of 2025''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents, etc.
Sec. 2. Automatic contribution plan or arrangement.
Sec. 3. Credit for certain small employer automatic IRA arrangements.
Sec. 4. Treatment of automatic IRA arrangements under State law.
(c) Amendment of 1986 Code.--Except as otherwise expressly
provided, whenever in this subtitle an amendment or repeal is expressed
in terms of an amendment to, or repeal of, a section or other
provision, the reference shall be considered to be made to a section or
other provision of the Internal Revenue Code of 1986.
SEC. 2. AUTOMATIC CONTRIBUTION PLAN OR ARRANGEMENT.
(a) Automatic Contribution Plan or Arrangement.--
(1) In general.--Section 414 is amended by adding at the
end the following:
``(dd) Automatic Contribution Plan or Arrangement.--For purposes of
this title--
``(1) In general.--The term `automatic contribution plan or
arrangement' means--
``(A) a defined contribution plan that--
``(i) is described in clause (i), (ii), or
(iv) of section 219(g)(5)(A),
``(ii) includes a qualified cash or
deferred arrangement or a salary reduction
arrangement, and
``(iii) meets the notice, eligibility,
contribution, fee, and lifetime income
requirements of paragraphs (2), (3), (4), (6),
and (7), respectively,
``(B) an automatic IRA arrangement described in
paragraph (8),
``(C) an arrangement described in section 408(p)
that meets the notice, contribution, investment, and
fee requirements described in paragraphs (2), (4), (5),
(6), respectively, and
``(D) a plan described in clause (i), (ii), (iv),
(v), or (vi) of section 219(g)(5)(A) that is
established and maintained by an employer as of the
date of enactment of the Automatic IRA Act of 2025, or
a plan described in section 219(g)(5)(A)(iv) that is
not subject to title I of the Employee Retirement
Income Security Act of 1974 and offers annuity
contracts, or makes custodial accounts available to
employees, as of such date.
``(2) Notice requirements.--A plan or arrangement shall be
treated as meeting the notice requirements of this paragraph
with respect to an employee if the plan or arrangement meets
notice requirements similar to the notice requirements of
section 401(k)(13)(E).
``(3) Eligibility requirements.--
``(A) In general.--The requirements of this
paragraph shall be treated as met if all employees of
the employer are eligible to participate in an
automatic contribution plan or arrangement maintained
or facilitated by the employer.
``(B) Certain exclusions.--The following employees
may be excluded from consideration in determining
whether the requirements of this paragraph are met:
``(i) Individuals less than 21 years old.--
Any employee who has not attained age 21.
``(ii) Certain other employees.--Any
employee described in section 410(b)(3).
``(iii) Service requirements.--Any employee
who has completed neither of the following
periods of service with the employer
maintaining or facilitating the plan or
arrangement:
``(I) The period permitted under
section 410(a)(1) (determined without
regard to subparagraph (B)(i) thereof).
``(II) A period of 2 consecutive
12-month periods during each of which
the employee has at least 500 hours of
service.
For purposes of subclause (II), 12-month
periods shall be determined in the same manner
as under the last sentence of section
410(a)(3)(A).
``(iv) Certain students in case of a 403(b)
plans.--In the case of an annuity contract
described in section 403(b), employees who are
students, but only to the extent such employees
may be excluded under the last sentence of
403(b)(12)(A).
``(C) Special rules for controlled groups.--All
eligible employees of an employer need not be eligible
to participate in the same automatic contribution plan
or arrangement. For purposes of this subsection, the
term `employer' shall include all employers treated as
a single employer under subsection (b), (c), (m), or
(o) of section 414.
``(D) Entry dates.--Rules similar to the rules of
section 410(a)(4) shall apply with respect to employees
who have satisfied the age and service requirements
referenced in subparagraph (B) and who are otherwise
entitled to participate in a plan or arrangement.
``(E) Automatic iras for non-employees.--The
Secretary shall by regulation or other guidance provide
for making available automatic IRAs to individuals who
provide services that do not constitute employment.
``(4) Contribution requirements.--
``(A) In general.--The requirements of this
paragraph shall be treated as met if, under the plan or
arrangement, each employee eligible to participate in
the plan or arrangement is treated as having elected to
have the employer make elective contributions in an
amount equal to the qualified percentage of
compensation.
``(B) Election out.--The election treated as having
been made under subparagraph (A) shall cease to apply
with respect to any employee if such employee makes an
affirmative election--
``(i) not to have such contributions made,
or
``(ii) to make elective contributions at a
level specified in such affirmative election.
``(C) Qualified percentage.--For purposes of this
paragraph, and except as provided in subparagraph
(D)(i), the term `qualified percentage' means, with
respect to any employee, any percentage determined
under the plan or arrangement if such percentage is
applied uniformly, does not exceed 15 percent (10
percent during the period described in clause (i)), and
is at least--
``(i) 6 percent during the period beginning
on the date on which the first elective
contribution described in subparagraph (A) is
made with respect to such employee and ending
on the last day of the first plan year which
begins after such date,
``(ii) 7 percent during the first plan year
following the plan year described in clause
(i),
``(iii) 8 percent during the first plan
year following the plan year described in
clause (ii),
``(iv) 9 percent during the first plan year
following the plan year described in clause
(iii), and
``(v) 10 percent during any subsequent plan
year.
``(D) Rules relating to automatic IRA
arrangements.--For purposes of this paragraph--
``(i) Qualified percentage.--In the case of
an automatic IRA arrangement, the term
`qualified percentage' means, with respect to
an employee for any taxable year, a percentage
equal to the minimum percentage described for
the taxable year under subparagraph (C)
determined by substituting `taxable year of the
employee' for `the plan year' each place it
appears.
``(ii) Payroll deduction contributions.--In
the case of an automatic IRA arrangement, any
reference in this paragraph to elective
contributions shall be treated as including a
reference to payroll deduction contributions.
``(5) Investment requirements.--
``(A) In general.--
``(i) Default investments.--A plan or
arrangement shall be treated as meeting the
requirements of this paragraph if in the
absence of an investment election by a
participant or beneficiary, amounts are
invested only in the class of assets or funds
described in subparagraph (B).
``(ii) Required investment options in
automatic ira arrangement.--In addition to the
default investment requirement of clause (i),
an automatic IRA arrangement shall be treated
as meeting the requirements of this paragraph
if the arrangement provides the option of
investing in each of the classes of assets or
funds described in subparagraphs (B), (C), (D),
and (E), and no other investment options.
``(B) Target date/lifecycle option.--The class of
assets or funds described in this clause is the class
of assets or funds that constitutes an investment fund
product or model portfolio described in Department of
Labor regulation section 2550.404c-5(e)(4)(i).
``(C) Principal preservation.--The class of assets
or funds described in this clause is the class of
assets or funds that is designed to protect the
principal of the individual on an ongoing basis.
``(D) Balanced option.--The class of assets or
funds described in this clause is the class of assets
or funds that constitutes a qualified default
investment alternative under Department of Labor
regulation section 2550.404c-5(e)(4)(ii).
``(E) Other.--Any other class of assets or funds
determined by the Secretary to be a qualified
investment for purposes of this section.
``(6) Fee requirements.--In the case of any plan or
arrangement not otherwise subject to title I of the Employee
Retirement Income Security Act of 1974, under the fee
requirements of this paragraph, no participant, beneficiary,
employer, individual retirement account, plan, or arrangement
may be charged unreasonable fees or expenses.
``(7) Lifetime income requirements.--
``(A) In general.--Except in the case of a plan
maintained by an eligible employer (as defined in
section 408(p)(2)(C)(i)), a plan or arrangement shall
be treated as meeting the lifetime income requirement
described in this paragraph if the plan or arrangement
permits participants to elect to receive at least 50
percent of their vested account balance in a form of
distribution described in section 401(a)(38)(B)(iii).
``(B) Exception.--
``(i) In general.--This paragraph shall not
apply with respect to any participant whose
vested account balance is $200,000 or less at
the time of distribution.
``(ii) Not treated as discriminatory in
favor of highly compensated employees.--A plan
shall not be treated as failing to meet the
requirements of section 401(a)(4) solely by
reason of applying the exception of clause (i)
to the requirements of subparagraph (A).
``(8) Automatic ira arrangement.--
``(A) In general.--For purposes of this paragraph,
the term `automatic IRA arrangement' means, with
respect to an employer (and trustee or issuer
designated by the employer), an arrangement facilitated
by the employer which meets the requirements of this
paragraph and the contribution, investment, and fee
requirements of paragraphs (4), (5), and (6),
respectively, and under which an employee--
``(i) may elect--
``(I) to have the employer make
payroll deduction deposits on behalf of
the individual as payroll deduction
contributions to an individual
retirement account, or
``(II) to have such payments paid
to the employee directly in cash,
``(ii) is treated as having made the
election under clause (i)(I) at the level
determined under paragraph (4)(D) until the
individual makes an affirmative election not to
have such contributions made (or to have such
contributions made at a level specified in the
affirmative election), and
``(iii) may elect to modify prospectively
the level at which contributions are made and
the manner in which such contributions are
invested for such year.
``(B) Administrative requirements.--
``(i) Payments.--The requirements of this
paragraph shall not be treated as met with
respect to any automatic IRA arrangement unless
the employer makes the payments elected or
treated as elected under subparagraph (A)(i) on
or before the last day of the month following
the month in which the compensation otherwise
would have been payable to the employee in
cash.
``(ii) Notice of election period.--The
requirements of this paragraph shall not be
treated as met with respect to any year unless
the employer notifies each employee eligible to
participate, within a reasonable period of time
before the beginning of such year (and, for the
first year the employee is so eligible, a
reasonable period of time before the first day
such employee is so eligible), of--
``(I) the opportunity to elect to
have contributions made, or to be
treated as so electing, under clause
(i)(I), or (ii), of subparagraph (A),
``(II) the opportunity to elect not
to have payroll deduction contributions
made or to have such contributions made
at a different percentage or in a
different amount, and
``(III) the opportunity under
subparagraph (A)(iii) to modify the
manner in which such amounts are
invested for such year.
The employer shall provide such notice in paper
form or, if the employee so elects, in
electronic form.
``(C) Eligibility requirements.--
``(i) In general.--The requirements of this
paragraph shall not be treated as met with
respect to an automatic IRA arrangement
facilitated by the employer unless all
employees of the employer are eligible to
participate in the arrangement.
``(ii) Certain exclusions.--The following
employees may be excluded from consideration in
determining whether the requirements of this
paragraph are met:
``(I) Individuals less than 18
years old.--Any employee who has not