NEW YORK (AP) — Many small businesses don’t offer retirement plans to their employees because they’re extremely expensive and complicated.
but Secure Act 2.0 The scheme, passed by Parliament at the end of 2022 and gradually rolled out, aims to make it easier for small and medium-sized businesses to offer retirement plans.
That’s important. Because offering a retirement plan is a way to retain and retain good employees.
This law allows small businesses to band together and pool their resources to offer what are known as multiemployer plans. Although it can be a pain to set up initially, businesses will save money in the future by saving on administrative costs.
There are also tax credits available to small businesses starting new employee plans. This credit is up to 100% of the start-up costs of implementing and maintaining a new 401(k) plan, up to a limit of $5,000.
There is also a tax credit based on employer contributions for the first five years of the plan, up to $1,000 per employee per year.
To qualify for either credit, a small business must have 100 or fewer employees who received compensation of $5,000 or more in the previous year, and the plan must have covered substantially the same employees during the previous three tax years. It is required that you do not provide . Consult your tax advisor to determine whether you qualify for these deductions.
An additional $500 tax credit is available for up to three years for small businesses with 100 or fewer employees that add a qualified automatic contribution plan to their plan.