The SECURE Act 2.0, signed into law in December 2022, brings exciting news for small and medium-sized businesses (SMBs) looking to provide retirement plans for their employees in 2023. This new legislation adds over 90 provisions, with a focus on expanding small business tax incentives for retirement plans.
What To Know
Tax credits for new plans
One of the key changes in SECURE 2.0 is the expansion of the tax credit for new plans. Businesses with 50 or fewer employees may now be eligible for a tax credit to cover 100% of plan start-up costs, capped annually at $5,000 for three years. Companies with 51-100 employees also stand to benefit, as they may now be eligible for a tax credit to cover 50% of plan start-up costs, also capped at $5,000 annually for three years. If you don’t have a plan in place, this incentive just made it much more affordable. Don’t know where to start? An HR Consulting Company like the Human Resources Group can help you navigate all the small details.
Expansion of start-up tax credit
Another critical change in SECURE 2.0 is the expansion of start-up tax credit eligibility. Employers who join existing multiple employer plans can now qualify for the credit instead of just those who join new plans. This makes it more accessible for SMBs to join existing plans and take advantage of the tax benefits.
New credits for employer contributions
In addition to expanding start-up tax credits for new and existing plans, SECURE 2.0 also introduces new credits for employer contributions. SMBs with 50 or fewer employees can qualify for a new tax credit based on a percentage of employer contributions, up to $1,000 per employee for those earning less than $100,000. Employers with 51-100 employees also qualify for a phased-in credit.
Continued tax credit for auto-enrollment
One of the most popular provisions of the original SECURE Act, the tax credit of $500 per year for the first three years of electing auto-enrollment, is also maintained under SECURE 2.0. This is great news for SMBs looking to make retirement plan enrollment easier for their employees.
Increase the Financial Well-Being of Employees
Overall, the SECURE Act 2.0 brings many exciting changes for SMBs looking to provide retirement plans for their employees. Not only does having a retirement plan show that an employer is invested in the financial well-being of their employees, but it also allows the employee to focus on their work and overall well-being, increasing their likelihood of staying with the company. With expanded tax incentives and new credits for employer contributions, it's now more affordable for businesses to offer retirement plans and help their employees secure their financial future. If you want to invest in and retain employees, reach out to The Human Resource Consulting Group to review the best Retirement Plan solution for your business.
