SECURE 2.0 Act

Tax Credits for Business Owners

The SECURE Act tax credits offer significant benefits for retirement plan sponsors, especially for small and mid-sized businesses.

For plan sponsors, these credits offset the initial and ongoing costs of a 401(k) retirement plan, making it easier and more accessible to provide a retirement plan to employees. The tax credits also support plan sponsors in aligning with evolving legislation, ensuring compliance and maximizing savings.

Below is a simple summary outlining each tax credit available with the SECURE Act:

Startup Plans

New plans only

100% tax credit for plans with 50 or less employees who receive compensation of $5,000 or more. (50% tax credit for plans with 51-100 employees)
$250 per employee up to a max credit of $5,000.
Applies to taxes in the first three tax years of the plan.

Employer Contribution

New and existing plans

Tax credit based on the amount contributed by the employer on behalf of employees, up to a per-employee cap of $1,000.
The credit is a decreasing percentage of the amount contributed by the employer over a five-year span.

Automatic Enrollment

New and existing plans

$500 tax credit applied when an automatic feature is added.
Applies to taxes in the first three tax years the feature is effective.
Newly mandated to include automatic enrollment.

Key Takeaway: The SECURE Act tax credits can offset up to 100% of the administrative fees associated with setting up and maintaining a retirement plan, easing the financial burden to employers.

Connect with your Regional Vice President to learn more.

29 Oct 2024

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Trinity Pension Consultants