Don’t Miss Out: SECURE Act Tax Credits & 401(k) Plan Features
The most comprehensive pension reform in 20 years, the SECURE Act, is a step forward to allow people greater access to retirement plans.
The act hopes to expand retirement savings while alleviating administrative headaches. As such, the SECURE Act includes incentives such as:
- · Tax credits to encourage business owners to set up a workplace retirement plan
- · 401(k) plan design features to help employees better prepare for their futures
- · Administrative improvements for managing a retirement plan
Tax Credits for Small Businesses
Tax credits for eligible employers are designed to alleviate some of the 401(k) start-up costs and incentivize businesses with 100 or fewer employees to offer a retirement plan.
Two credits are available:
- · Startup costs. A tax credit of 50% of eligible startups costs up to $5,000 for each of the plan’s first three years.
- · Auto-enrollment credit. An additional tax credit of $500 per year for a three-year period for offering auto-enrollment into the plan.
This equates to up to $5,500 a year, or $16,500 over three years for an employer who takes advantage of both tax credits.