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The SECURE 2.0 Act: What Small Businesses Need to Know

Tuesday November 14th, 2023

Estimated time to read: 2 minutes

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In a tight labor market, employers need all the help they can get to attract and retain the best talent. In addition to salaries and work/life balance employers would be wise to focus on providing better retirement plans. According to our 2023 Voice of the Workforce report based on a survey of 1,100+ employees, nearly half of all respondents say retirement plans are one of the biggest factors when considering whether to accept a job offer. isolved is monitoring new legislation that might make it easier for even the smallest companies to be competitive in this area.

The Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 passed in December of 2022 with over 90 retirement related provisions set to take effect over the next few years. The law aimed to substantially encourage more retirement savings, improve retirement rules and lower employer retirement plan set up costs for small businesses. 

A new bill, the Retirement Investment in Small Employers (RISE) Act, was introduced in the House of Representative in October of 2023. If passed, the RISE Act would maximize tax credits available to micro-employers (with fewer than 10 employees) who offer comprehensive retirement plans for their employees.

Benefits for Employers

The following tax credit incentives may be available to small businesses that do not currently offer retirement benefits to their workers:

  • Up to $5,000 annual tax credit for administrative costs of starting retirement plans
  • Up to $1,000 tax credit per employee for eligible employer contributions
  • $500 tax credit for having the retirement plan automatically enroll eligible employees

Benefits for Employees

The Act has made it easier than ever for employees to save for retirement. Here’s how:

  • Annual catch-up limits
  • Auto-escalate elective deferrals
  • Increased deferral limits
  • Permitting long-term, part-time employees to participate in retirement plans
  • Permitting employees to choose to have employer match contributions be post-tax (Roth)
  • Permitting employers to offer plan-linked Emergency Savings Accounts (ESAs)

How isolved Can Help Small Businesses

As a supporter of small businesses, isolved is actively monitoring this legislation. These changes have the potential to significantly benefit our customers and their employees. No longer exclusively accessible to larger organizations, retirement benefits can enable small businesses to gain a competitive edge by attracting and retaining engaged employees.

Administering a 401(k) plan requires a lot of moving pieces. Many businesses simply do not have the internal resources to manage all that goes into it. You can trust isolved 401(k) for end-to-end plan administration and compliance with current legislation, while enabling you and your organization to leverage the tax advantages.

To learn more about isolved Retirement Services, click here.

Disclaimer: The information provided herein is for general informational purposes only and is not intended to be legal, investment or tax advice. It is not a substitute for professional legal, investment or tax advice, and you should not rely on it as such. No attorney-client or accountant-client relationship or any other kind of relationship is formed by any use of this information. The effective date of various provisions, amendments, and regulatory guidance may impact eligibility. The accuracy, completeness, correctness or adequacy of the information is not guaranteed, and isolved assumes no responsibility or liability for any errors or omissions in the content. You should consult with an attorney, investment professional or tax professional for advice regarding your specific situation.