By Todd Pouliot, AIF
As a small business owner, offering a retirement plan to your employees is a great way to attract
and retain top talent while also securing your own financial future. However, the costs associated
with setting up and maintaining a retirement plan can feel overwhelming. Fortunately, the SECURE
Act provides valuable tax credits to make it easier and more affordable for small businesses to
offer a 401(k) plan.
If you’ve been considering starting a retirement plan for your business, these tax incentives could
be the push you need to take the next step. Here’s what you need to know:
Tax Credits for New Retirement Plans
Startup Costs Tax Credit
For businesses that start a new retirement plan, the SECURE Act offers a tax credit to help cover
administrative costs:
● Businesses with 50 or fewer employees who earn $5,000 or more annually receive a 100% tax credit
for plan setup costs (50% tax credit for businesses with 51-100 employees).
● The credit is $250 per eligible employee, up to a maximum of $5,000 per year.
● This credit applies to the first three tax years of the plan.
Employer Contribution Tax Credit
If your business is offering a retirement plan for the first time and you decide to contribute to
your employees’ accounts, you may qualify for additional credits:
● A tax credit is available based on the amount contributed by the employer.
● The credit applies to contributions up to $1,000 per employee.
● This benefit phases out over five years, decreasing each year.
Automatic Enrollment Tax Credit
Automatic enrollment encourages employees to participate in their retirement plan by enrolling them
by default unless they opt-out. To encourage this feature:
● Businesses that add automatic enrollment to their new or existing plan receive a $500 tax
credit.
● This credit applies for three tax years.
● Automatic enrollment is now required for many new plans under recent updates.
Why This Matters for Small Business Owners
By taking advantage of these SECURE Act tax credits, small business owners can offset up to 100% of
the costs associated with launching and maintaining a retirement plan. This not only makes it more affordable
to support your employees' financial well-being but also helps your business stay competitive in attracting and
retaining talent.
If you’re a Nordonia Chamber of Commerce member looking to explore retirement plan options for your
business, now is the perfect time to take advantage of these savings. A well-structured retirement
plan can be a win-win for both you and your employees!
Need help getting started? Reach out to a financial professional who can guide you through the
options available for your business.
For more reading on What type of Tax Planning do I need? 5 most common items, click the link , or
visit us at www.mygatewaymoney.com.
