Do Tax-Exempts Hold the Key?

The SECURE 2.0 Act of 2022 was introduced to improve #US workers' retirement plan access and outcomes. One of the critical components of the legislation is the provision of tax credits to small employers that establish retirement plans.?

A tax credit is a monetary #incentive provided by the government that directly reduces the amount of tax owed by an individual or business.?

While this is an attractive incentive for many businesses, a lingering question remains: are tax-exempt employers eligible for these credits??

The unfortunate answer is no.?

The reason behind this exclusion lies in the very nature of tax credits. Tax credits are designed to reduce the tax liability for entities subject to #taxation. As tax-exempt organizations do not pay taxes, they cannot benefit from tax credits. This distinction between taxable and tax-exempt entities was also addressed after the passage of the original #SECUREAct, and the same logic applies to the SECURE 2.0 Act.

While tax-exempt employers may feel left out in the cold by the SECURE 2.0 Act's credits for small employer retirement plan start-up costs, it's essential to remember that the #legislation focuses on #taxincentives. Perhaps future regulations might address these voids. Until then, the quest for a fair and equal retirement landscape continues.?

Stay tuned for more insightful updates on retirement plan regulations and how they affect various types of employers. #congruentsolutions