The SECURE Act Tax Credit

The purpose of the SECURE Act legislation is to make it easier for individuals to save for retirement through their employer’s qualified retirement plan. One of the most appealing provisions is the startup tax credit for small businesses.

What is the startup tax credit for small businesses?

The SECURE Act startup tax credit reduces the out-of-pocket plan costs to Employers.

• Reduces the amount of taxes that an Employer owes in the first three tax years of the plan.
• The credit covers 50% of the total out-of-pocket expenses to administer the plan.
• For plans beginning after December 31st , 2019, receive the maximum annual credit of $500.
• If plan costs are greater, based on formula, Employers can receive up to a $5,000 tax credit. Formula: $250 multiplied by the number of eligible non-highly compensated employee

Who is eligible for the tax credit?

Employers must meet all four following requirements to be eligible.

• The plan must have less than 100 employees who receive compensation of $5,000 or more.
• The plan has at least one non-highly compensated employee.
• The plan must be a start-up qualified retirement plan.
• The Employer has not offered a similar plan covering the same employees during the previous three tax years.

Adding retirement plans to your book of business has become even easier as legislations like the SECURE Act are passed.?The SECURE Act incentivizes Employers to startup a retirement plan as the costs are offset by tax credits.

Contact your Regional Vice President-Retirement Sales to learn more. Call 888.206.6290