How the Retirement Investment in Small Employers Act is Helping Businesses
Learn more about the SECURE Act 1.0 and 2.0.
Find out how Paychex can help you with retirement services.
Claudia Tenney (01:09):
I know what it's like to run a business, to make payroll, to try to allure great employees. And one of the things that we did in our region, which was so important, was to establish a 401(k) long before any other private employers.
Speaker 5 (01:25):
Welcome to Paychex THRIVE, a Business Podcast, where you'll hear timely insights to help you navigate marketplace dynamics and propel your business forward. Here's your host, Gene Marks.
Gene Marks (01:41):
Hey, everybody. It's Gene Marks and welcome back to another episode of the Paychex THRIVE Podcast. Thank you so much for joining me.
Gene Marks (01:47):
And I have a special guest today. It is Representative Claudia Tenney. Congresswoman Tenney is a Republican from New York State, actually, I think in Paychex's general area, right, Congresswoman? Somewhere in that, all of you New York State people.
Gene Marks (02:01):
But we are not talking about New York State right now. We are talking about a new bill that the Congresswoman has proposed and put out there for you to see how far it goes into the process. And it's an important one. It's called the Retirement Investment in Small Employers Act, or the RISE Act.
Gene Marks (02:19):
So, first of all, congresswoman, thank you very much for joining us. I'm thrilled that you're here. And because you're sponsoring this bill, please tell us all what it's all about.
Claudia Tenney (02:31):
Yeah. Well, thank you for having me on and why this is important, and yes, Paychex was founded near where I represent. I have New York 24, which now spans North of Clayton all the way to Lockport, including the Finger Lakes. And Tom Golisano, the founder of Paychex, still has a lake house on Canandaigua Lake, so he's still there. And I'm a Paychex customer as well. So, have been for many years-
Gene Marks (02:55):
There's connection to all over the place here, right? Just overlapping.
Claudia Tenney (03:01):
Yeah. But look, this is really important. I'm also a small employer. Our business was started in 1946 and we, at one point, had over 120 employees and we're down to about 65. We sold off one division of the business in 2004, which was a newspaper that I ran before I got involved in politics. So, I know what it's like to run a business, to make payroll, to try to allure great employees. And one of the things that we did in our region, which was so important, was to establish a 401(k) long before any other private employers were able to do that. We also had a very comprehensive and terrific healthcare plan, not so great now post 2010.
Claudia Tenney (03:41):
But we still provide those things because they're things that matter to our employees and they help us get a competitive edge on getting good competent employees to work for us in a very rural region of Upstate New York. So, I'm very passionate about small business issues as a small business owner. The whole reason I even ran for the state legislature and eventually Congress was to help our small business community. Our business has been an NFIB, National Federation of Independent Business, member for many years. We're involved with all types of groups. We have a small pharmaceutical and kind of a mixed packaging company, is what we do.
Claudia Tenney (04:19):
But the reason we came up with this idea was there are some very small employers, you might say really micro employers, and I'm working with Congressman Dan Kildee, who's a Democrat from Michigan, who's actually very strong on a lot of these issues, really great on small business, understands what's happening. And so, it's always great to partner with the Democrat and we always try to partner with the Democrat in all my legislation for a number of reasons. One, because I made a commitment to that. And two, I think when you're doing tax policy, it's really important on the Ways and Means Committee where I serve that we get buy-in from both sides so we have a chance of getting these things passed. And also, when it comes to numbers, I think that we can see more common ground obviously as Republicans and Democrats.
Claudia Tenney (05:04):
But basically what we're offering in this bill is a technical fix to the SECURE 2019 and then the SECURE 2022 bill. And what we're doing is giving a little bit more opportunity for small businesses to have an advantage. So, a little bit about SECURE. The SECURE 2019 gave small businesses a 50% administrative costs for defined contribution plans for the setup up to a $5,000 maximum startup credit, which was great. But then, we got to the small business owners and then SECURE 2022 didn't give that same type of benefit to the micro businesses with smaller... One to 10 employees basically. And so, we wanted to open it up for them because they actually create most of our jobs, believe it or not. Most of the small businesses do.
Claudia Tenney (05:56):
So, basically what we did is added a technical fix that will give small and micro businesses startup costs, obviously 100% because that was part of the new SECURE bill, but also administrative startup costs up to $5,000 and actually, for small businesses, a $2,500 credit. And that would be a credit to their taxes, not necessarily payroll. But we think that will be helpful. And unfortunately... SECURE already covers the payroll tax credit, so you may want to enhance that for your listeners, but that's something we haven't done yet.
Gene Marks (06:32):
Fair enough. So, just to make sure, so the SECURE 2.0 that came out last December, even though there was a tax credit that was available for businesses, really the very, very smallest of businesses, the ones that were less than 10 employees, couldn't take fully advantage of that. And the purpose of the RISE Act, what you've done is to make sure that all businesses can, even the very smallest can get a tax credit. And again, I hate to put people on the spot for the details, is this a refundable tax credit or is it just a credit that can be applied against future taxes?
Claudia Tenney (07:06):
Right. It's not refundable, but it goes toward plan startup costs and that's basically what it does. But it does give an opportunity for these small businesses to sharing the same benefits that larger businesses have the opportunity to share.
Gene Marks (07:18):
Yeah. Which is, I mean, obviously it's extremely important. And is the bill itself... You said it's a technical fix, but it is its own separate bill. In other words, it still needs to pass both Houses and it does need to be signed by the president. Do you expect, congresswoman, that this bill itself can on its own go through... Not only get approval by the House, by the Senate, be signed by the president, but is your expectation that it would be tacked onto something else or be included as part of a larger bill?
Claudia Tenney (07:47):
Yes. I mean, obviously, yeah, we hope that that could happen. There's some reauthorization bills, there's some more approps bills. But there's also the marker that we laid out as the Ways and Means Committee. We passed a bill that is comprehensive that I think is going to see some amendments if we get that to the floor, and that we could actually be part of that amendment process and this bill could be added. Certainly, we'll be advocating for that. So, there is possibility.
Claudia Tenney (08:12):
And we're looking at... It's going to be a little bit of a rocky road this fall. We're going to be looking at continuing resolutions and really just a lot of interesting legislating. With the very narrow four seat majority the Republicans have at the moment, we should be adding another one in December, but if somebody retires or something happens, obviously we're struggling. But again, that's why I emphasize how important it is to have bipartisan legislation.
Claudia Tenney (08:41):
And I think this bill would pass really easily, honestly, if we could get it attached to something and get it out there, or get it as an amendment to one of the major bills that we're putting in, whether it's the overhaul, the tax plan, which there's still a debate about whether the state and local tax deduction should be considered at various levels and added on to our original tax bill.
Claudia Tenney (09:01):
That's something that a lot of New Yorkers and Blue State Republicans and Democrats are advocating for. So, we'll see. That will be revisited. And the state and local tax deduction actually expires under the Tax Cuts and Jobs Act, at the end of 2024. But there's members that are looking for a continuation of SALT or at least a change in what the SALT mix is right now.
Gene Marks (09:25):
Sure. I would hope that we could talk to you later on in 2024 as there's so many other parts of the 2017 tax bill that is going to be expiring at the end of that year and in 2025, and I know that's going to be a lot of conversations I'm sure you're going to have, particularly on the Ways and Means Committee that you're on as well.
Gene Marks (09:43):
Back to the SECURE, the RISE Act as well, can you at least give me status of it? I know you proposed it, we're speaking right now, it's the end of October. Has this been at all voted on in the House?
Claudia Tenney (09:57):
No, we haven't had a vote on it. We're going to be introducing that as soon as we get the House open.
Gene Marks (10:02):
Yeah, fair enough.
Claudia Tenney (10:03):
We've introduced it. I mean, I think we're going to introduce it this week. But in terms of getting any action on the floor and to the committee, we can do committee work so it's something that we're going to be pushing the chairman Jason Smith from Missouri to get there. I think he would be completely supportive of it. He's a small business person himself. And I don't know of any opposition to this bill or why would be controversial. I think it's a real... Whenever you have a technical fix, that's usually not controversial and it is just a matter of pushing that through.
Claudia Tenney (10:33):
But again, the vehicle of getting it there is one of our challenges and I think there's ways that we can get it added on. We're just looking for a place and that will kind of start happening when we get into November and December, when we start getting the crunch into the end of the year and seeing what's actually going to be voted on, what we're going to be looking at. And so, those types of vehicles may become more apparent at the time.
Gene Marks (10:57):
And it's funny too, you talk about it being a technical fix, which certainly helps get a bit like this past, it's small business related and small business is definitely one bipartisan thing. I mean, nobody fights over small businesses, it seems. So, it would just seem like this would've an easier passage than something that might be a little bit more contentious.
Gene Marks (11:15):
Is there a similar bill in the Senate? Do you need a Senate... Sponsors of a similar bill to-
Claudia Tenney (11:21):
Yeah, we're working on making sure that we have exact legislation and exact language so that we can get buy-in on there. But we are working with senators right now who are interested in doing the technical fix. I don't have the name of somebody right now that's definitely going to be putting it in, but I don't think it's going to be an issue. I think the Senate's kind of focused on some other things right now. But we have some great partners in the Senate. And bipartisan, again, this will be a bipartisan technical fix and a bill that, although it's not flashy and sexy or whatever, but it is really important to our small business community.
Claudia Tenney (11:54):
And especially Upstate New York. I mean, it's all small businesses in Upstate New York. And even small manufacturing businesses, retail, there's all kinds of businesses out there that really want to provide for their employees, but it's been challenging with the vehicles and challenging to get that. The startup costs can be very heavy and very high. And so, there's a disincentive. We want to create every incentive to protect employers and making sure that they're giving those incentives to their employees.
Gene Marks (12:25):
Great answer. That's great. The technical fix is great. SECURE 2.0 is also great. My biggest complaint about SECURE 2.0, congressman, is that not enough people know about it. When I speak about it to groups and associations, the details of SECURE 2.0 and some of the provisions that it has matching student loans for retirement and providing emergency funds, things like that with business owners really need to know about, just does not... Maybe there's just too much noise out there and people just don't-
Claudia Tenney (12:54):
That's one of the things a lot of... There's so many resources out there for small businesses. It could be obviously Paychex, and not to give a shameless plug here, but Paychex does reach out. I get calls about once a month from Paychex, "Do you want to add a 401(k)? What do you want to do with your..." I have a particularly small payroll with them right now. I used to have a larger one. But they are always asking us about what we can do to enhance.
Claudia Tenney (13:20):
But also there's different organizations. I cited the National Federation of Independent Business, even SBA offers programs and things that small business owners should be taking advantage of. And we, as an office, do outreach to small business owners to try to encourage them through our local governments and sometimes through the state government as well. We have programs to get people aware of it.
Claudia Tenney (13:41):
And by the way, even though you're a CPA, a lot of CPAs and accountants are really helpful in recommending to businesses. And I recommend to anyone, "If you're going to get started, go to somebody who is a professional who does this every day, and they can give you the latest and the greatest." I mean, I call my accountant all the time about everything because, even though I know what a lot of the laws are, I don't know what's going on in New York State all the time anymore because I'm not there. But they will give us, "Hey, are you taking advantage of this?" And we went through COVID. There were so many issues in COVID that we had to fight through and figure out what we're going to do with it when it came to our tax implications.
Claudia Tenney (14:15):
So, I always say, "Go to a professional and make sure that you've got everything mapped out if you're a small business owner." And you avoid the pitfalls of what can happen when you start up a business that most small business people aren't thinking about. They're thinking about their great idea or their plan and what they want to do.
Gene Marks (14:32):
Claudia Tenney (14:32):
And so, I'm a lawyer, so I say, "Go to your lawyer too but, honestly, your accountant is more important."
Gene Marks (14:37):
Claudia Tenney (14:39):
The better account you have, the more you're going to avoid having to deal with a lawyer.
Gene Marks (14:41):
No doubt about it. And the better the team that you surround yourself with, the better they'll take care of those things where you run your business.
Gene Marks (14:47):
Before I let you go, and I only ask this because you really have a lot of experience in the world of small business, and I appreciate that and have not appreciated that enough. So, I do have a question for you. Now that you've spent some time in Washington as a small business owner yourself, assuming that things were easier to get passage through, and I know that is a big assumption, but I was kind of curious, as a small business owner yourself, what legislation would you love to see? I mean, is there anything else that's on your horizon or any other legislation that you think would be really great to be passed that could help? Where do you think Washington can help your company the most?
Claudia Tenney (15:30):
Well, obviously just about everything in the Tax Cuts and Jobs Act, at least the full expensing and the investment credits, those things were really important to my district, my family business. Anyone who has a pass-through business, that 20% deductability right off the top was really helpful. And so, a lot of really good provisions in the Tax Cuts and Jobs Act. I know a lot of New Yorkers don't like it because it was tough on SALT, but we did have a SALT standard. And by the way, in my district that I represented at the time, my district is a little different now, only 5% of taxpayers in my district actually itemized. In my new district, it's about 5.5%. So, that's a really low number when you look at everybody else got a tax increase and our small businesses thrived.
Claudia Tenney (16:17):
And so, I would like to see the continuation of so many good provisions of the Tax Cuts and Jobs Act. I'm willing to see a little bit more on the SALT fix. But here's the issue, we did that Tax Cuts and Jobs Act through reconciliation because we did not have a 60 vote majority in the Senate, so we had to do it through the budget. So, we had to do a lot of horse-trading to get that number to a number that was acceptable to the parliamentarian in terms of the impact. And there's a lot of talk depending on which side of the aisle you're on. But I think when you look at the growth and when you look at the actual numbers that came out of the Tax Cuts and Jobs Act, and when you look at some of the repatriation money over a trillion dollars, a trillion and a half, I think, have come back, those numbers are significant and they cause significant growth that far exceed the static numbers that you hear people say, "Oh, geez. It cost us money. But in the end, we actually had growth."
Claudia Tenney (17:12):
And so, in terms of a dynamic scoring, it actually was a real benefit to our country and especially the small business community where it was focused. We could have done even more if we did not have to do it under reconciliation. I hope that we can continue to keep many of those provisions, and I think there's a bipartisan group of people, not everyone, but I think there's a lot of Democrats and a lot of Republicans who support continuing that when push comes to shove and we get back to reconsidering that toward the end of the year and actually going into next year, especially now when you see inflation-
Gene Marks (17:43):
Claudia Tenney (17:43):
... And the high cost of energy-
Gene Marks (17:45):
Claudia Tenney (17:46):
And a lot of the complicated issues, mostly coming by the way from state government-
Gene Marks (17:51):
Claudia Tenney (17:51):
... Especially New Yorkers.
Gene Marks (17:54):
I mean, you said a mouthful and I couldn't agree with you more. And hey, listen, the taxes are only what? Like 20%, 25% of our entire income? No big deal. So, anything that can be done to keep them low and hopefully that qualified small business tax deduction and investment tax, research and development tax deduction, which is-
Claudia Tenney (18:10):
Yeah. That's a huge one. That one is huge, especially for Upstate New York.
Gene Marks (18:14):
Claudia Tenney (18:15):
We have so much research and development going on in New York and people don't even realize it.
Gene Marks (18:19):
Claudia Tenney (18:20):
This is the state that we had IBM, Xerox, Bausch + Lomb, Kodak, and now we have Lockheed presence, we have GlobalFoundries, all these other companies all across our communities in Upstate New York that are producing... Corning, unbelievable companies that can really benefit from this. And so, the technology is a really important edge for us. We now have Micron just got awarded today, the national award, so we're going to be going moving forward on Micron as well, in Upstate New York, which is only about a little over 20 minutes from where I live. So, that's exciting.
Gene Marks (18:59):
Well, listen, I can talk to you all day, this is great, about small businesses. But I appreciate the time. I want to wish you best of luck in getting the RISE Act through and past and signed so we can start benefiting from that. I know there's a lot of small businesses that really would benefit from it. So, thank you for all the work that you're doing.
Claudia Tenney (19:14):
Thank you. And thank you to you and Paychex and everyone for getting the communication out to our small business community. There are so many great people, very aspirational, young, trying to really make a difference in the world, and I think that this is the best way that we can help them, is get out of the way a little bit from government, especially from a tax perspective.
Gene Marks (19:33):
Gene Marks (19:34):
Everyone, I've been talking to Congressman Claudia Tenney, from New York. My name is Gene Marks and you have been listening and watching the Paychex THRIVE Podcast. Thank you so much for joining us. I hope you learned a lot. Let's wish best of luck to the congresswoman in getting that RISE Act bill through.
Gene Marks (19:50):
Thanks again for watching and listening. We will see you again next time. Take care.
Gene Marks (19:55):
Do you have a topic or a guest that you would like to hear on THRIVE? Please let us know. Visit payx.me/thrivetopics and send us your ideas or matters of interest. Also, if your business is looking to simplify your HR, payroll, benefits, or insurance services, see how Paychex can help. Visit the resource hub at paychex.com/worx, that's W-O-R-X. Paychex can help manage those complexities while you focus on all the ways you want your business to thrive.
Gene Marks (20:25):
I'm your host, Gene Marks. And thanks for joining us. Until next time. Take care.
Speaker 5 (20:31):
This podcast is Property of Paychex, Incorporated. 2023. All rights reserved.