Tax Credit Available for New Retirement Plans
By Doug O’Rear, OnTrack 401(k)
Upfront costs to start a company-sponsored retirement plan have historically been one of the biggest barriers prohibiting small employers from getting past the information-gathering stage of rolling out a plan to their employees and prospective new hires. Some recently passed legislation is helping to reduce those barriers. As part of the SECURE Act, companies that offer a new retirement plan to their employees can qualify for a tax credit of up to $16,500 over the next 3 years.
Here’s how it works:
- Small business owners who have not established a retirement plan are eligible for a retirement plan credit of $250 per non-highly compensated employee eligible to participate in a workplace retirement plan. The minimum credit per year is $500 and maximum is $5,000.
- The credit is for small businesses with up to 100 employees over a three-year period beginning after December 31, 2019, and applies to 401(k), SIMPLE, SEP, and profit-sharing plans.
- If the plan includes auto enrollment, the company would be eligible for an additional $500 tax credit for the first 3 years. This new credit is also available to plans currently in place that convert to automatic enrollment.
If this sounds good to you, click on the link below and let’s schedule a time to talk.
About the Author: Doug O’Rear, AIF, is a co-founder of OnTrack 401(k) and a former public school teacher. An Accredited Investment Fiduciary (AIF), Doug focuses on improving retirement outcomes by educating and empowering both plan sponsors and plan participants. Have questions about your retirement plan? Click here to schedule an appointment.
Investment advice offered through IFP Advisors, LLC, dba Independent Financial Partners (IFP), a Registered Investment Advisor. IFP and OnTrack 401(k) are not affiliated.