Revolutionizing Small Business Retirement Plans: What You Need to Know About SECURE Act 2.0

Retirement plans are great employee recruitment and retention tools, but many small business owners find them to be unaffordable even if they’re considered part of the norm for your industry.

Luckily, the original SECURE Act created significant tax benefits for small businesses, and the SECURE 2.0 (passed in December 2022) expands on these incentives. These tax benefits can be used to offset the administrative costs associated with an employer-sponsored retirement plan making it a more manageable employee benefit.

At CSI Accounting & Payroll, we’ve worked with thousands of small business owners over the past 50+ years. That means we’re familiar with common concerns about employee retirement plans, which is why we have an integrated partnership with Human Interest. The SECURE Act 2.0 helps our retirement plan partner, Human Interest, address:

• The needs of the business and employees
  
• The cost of plan setup and maintenance
  
• The administrative requirements of plan setup and maintenance

Employee Retirement Plan Needs

Your employees have certain needs when it comes to a retirement plan, and so does your business. Some states also require you to offer retirement plans to your employees. In fact, 46 states have implemented a state-based retirement savings program, studied program options, or considered legislation.

Consider how an employee retirement plan–especially a quality one with a tax-deductible employer contribution component can help you:

• Attract and retain talent
• Meet or exceed the expected employee benefits for your industry
• Boost job satisfaction, increasing productivity and loyalty
• Save for your own retirement
• Show that you’re financially stable

Read more about the benefits of offering retirement plans to your employees here. CSI’s partner, Human Interest, offers 401(k) and 403(b) plans that are great options for small and medium-sized businesses.

How do you determine which retirement plan is the best fit for your business? It must also meet your needs as far as cost and required administrative work. 

Retirement Plan Setup and Maintenance Costs

With many 401(k) and 403(b) options, we have partnered with Human Interest because of their transparent pricing and payroll integration. Additional to their affordable model for small businesses, the SECURE Act 2.0 can offset even more costs with tax incentives.

Tax credits now offset the cost of small businesses offering retirement plans. The SECURE Act 2.0:

• Doubles tax credits for new plans: Businesses with 50 or fewer employees may be eligible for a tax credit to cover 100% of plan start-up costs, capped annually at $5,000 for three years. Businesses with 51-100 employees may be eligible for a tax credit to cover 50% of plan start-up costs, capped annually at $5,000 for three years.
• Expands eligibility for the start-up tax credit: Start-up tax credits are extended to employers based on the year they join existing multiple employer plans (rather than only if they join a new plan).
• Adds new credits for employer contributions: Businesses with 50 or fewer employees may receive a new tax credit based on a percentage of employer contributions, up to $1,000/employee for those making less than $100,000. Employers with 51-100 employees qualify for a phase-in credit.
• Maintains tax credit for using auto-enrollment: The tax credit of $500 per year for the first three years of electing auto-enrollment is still available. Auto-enroll is required for new plans started after 12/29/22, beginning with the 2025 plan year.

Take a look at this example that highlights how tax credits toward an employee retirement plan can benefit a small business:

Retirement Plan Administrative Work

The final barrier to entry for small businesses that want to offer their employees retirement plans is the administrative burden. What are your responsibilities as the owner in terms of managing the retirement plan?

Is it even possible for you to offer a benefit without it requiring extra work on your part? Yes! Human Interest’s retirement plans are full service, making it easy for you to get started and maintain the plan. 

The SECURE Act 2.0 also allows for Multiple Employer Plans (MEPs) to allow unrelated employers to join together in a single 401(k) plan to reduce costs and administrative burdens.

Click here to learn more about the SECURE Act 2.0, including changes for employees and employers.

Find a Payroll Provider to Handle Your Payroll and Retirement Plan Needs

We highly recommend that small businesses offer their employees retirement plans, and with the help of the original SECURE Act, the SECURE Act 2.0, and our retirement plan partner, Human Interest, this is more accessible than ever!

Offering retirement plans to your employees is now tailored toward small business needs, budgets, and administrative capacities.

Plus, if you adopt plans from Human Interest and use CSI for your payroll service, you have all of the benefits of a bundled service! If you’re ready to have a conversation about whether or not CSI Accounting & Payroll and Human Interest can be a good fit for your business, schedule a free consultation by clicking the button below:

Not ready to make the jump? That’s okay! You can read more about the cost of payroll services instead: