Almost three-quarters of small businesses don’t offer a 401(k) plan, according to a survey last year by ShareBuilder 401k, a provider to employers.
But now it might be more financially attractive for small businesses to start plans and entice employees to enroll thanks to a host of new provisions passed as part of the SECURE 2.0 Act of 2022.
The act has over 90 provisions affecting retirement savings plans for both employers and employees and is being touted as a significant move in helping to strengthen the overall retirement system.
“It makes it easier for more businesses to start a plan and for more employees to contribute,” says Ron Ulrich, vice president of product consulting and compliance for Florham Park, New Jersey-based ADP Retirement Services.
It builds upon the original SECURE Act, which was passed in December 2019 to increase workers' access to retirement savings, he explains. ADP provides a summary of key provisions in the new act at https://tinyurl.com/2s49z6dc.
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Among new provisions, employers with up to 50 employees starting this tax year can be eligible for a three-year tax credit covering 100% of the start-administrative costs associated with adopting a workplace retirement plan with an annual limit of $5,000, Ulrich says, Those with 50 or more employees would fall under the provision of the original SECURE Act that provides a three-year tax credit for up to...
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