How The SECURE Act Affects 401(k)s
Matt Ruttenberg
Build a custom 401(k) for your business | Co-Owner & Director of Business Development of Life, Inc. Retirement Services
Recently, Congress passed one of the largest changes to the retirement plan industry in a decade.
The Setting Every Community Up for Retirement Enhancement Act, also known as The SECURE Act, has been years in the making.
The SECURE Act covers a lot of territory for retirement plans and 401(k)s and it’s fairly clear that the objective was to motivate employers to offer a retirement plan to their employees in order to give them an easy way to start saving for their retirement.
Below, we cover 3 main areas of how The SECURE Act affects 401(k)s through tax-credits, extensions, and increases.
Increase In Tax-Credits
Previously, employers who had implemented a 401(k) for their company received a flat $500 tax-credit. For many, this wasn’t enough incentive to offer a 401(k) plan due to the associated costs of administration.
Under The SECURE Act, employers will enjoy a minimum of $500, with a maximum of $5,000 for up to three years. The final amount depends on how many employees sign up for the plan. With each eligible employee, whether they participate or now, the employer will receive a $250 tax-credit, no less than $500.