Retirement plan law could be 'game-changer' for small businesses
Small-business owners are going to see big changes to their 401 and worker retirement packages — but there will be some tax credits too.folded into the government funding legislation passed in late 2022. The goal of the legislation was to help workers save for retirement while making it easier for small businesses to offer retirement plans to workers.
He also said that SECURE 2.0 allows small businesses who currently offer a Simple IRA plan to exchange it for a 401 plan without having to close down the plan and wait for a certain period of time. Employers will now be able to adopt a matching rule that counts an employee’s student loan payment toward the retirement match — and employers using that student loan payment to calculate their own matching contribution. That starts in 2024.
The legislation also requires automatic 401 enrollment at a rate of 3% and not more than 10% and not more than 15% of the worker's total compensation, although businesses with fewer than 10 workers and businesses in operation for less than three years are excluded. That goes into effect in 2025. “With expansion comes greater expenses – and hopefully revenue. But with government incentives vanishing, companies with ambitions must also look forward. Secure 2.0 provides some excellent credits and provisions that small businesses need to take advantage of. It’s also prudent to keep an extra cushion for down the line, just in case,” Arnold said.
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