Use The SECURE 2.0 Provisions to Boost Employee Loyalty & Productivity

Do You Know How to Capitalize on Its Provisions?

Leveraging SECURE 2.0 is more than just offering retirement benefits; it's about creating a culture that values long-term employment and financial security. By enhancing your retirement offerings, you improve your employees' financial outcomes and build a workplace that attracts and retains top talent.

For example, SECURE 2.0 gives small businesses a starter 401 (k) or a 403 (b) plan that employees can automatically enroll in. And instead of the $23,000 yearly contribution limit for traditional 401 (k) and 403 (b) plans, this starter kit has a $6,000 annual cap – you offer a retirement plan your employees can afford.

Employers can also enroll their employees into an emergency savings account where up to 3% of the employee's salary is deposited into their savings account linked to their retirement plans. Employees can save up to $2,500 and then deposit the rest of the money into the retirement account – you ease their financial worries. 

You can also match contributions for student loan payments. Student loans burden many employees; SECURE 2.0 allows employers to make matching contributions to retirement plans based on the amount employees pay towards their student loans. This provision is desirable to younger workers who may struggle to save for retirement while paying off debt. And this type of commitment to your employee's financial well-being fosters greater loyalty.

There is also something for those employees nearing retirement. SECURE 2.0 increases the limit on catch-up contributions for those aged 60 through 63. By informing and encouraging your older employees to take advantage of this benefit, you help them maximize their retirement savings during their peak earning years, which can be a crucial factor in their decision to stay with your company longer.

You Win Too!

Available tax credits could offset administrative costs for implementing SECURE 2.0 provisions to a point where you spend low to no cost. These include:

1. Startup Costs Credit: 

The credit for small employers that start new retirement plans, including 401(k)s or SIMPLE IRA plans, previously covered 50% of the administrative costs, up to a maximum of $500 per year. 

Under SECURE 2.0, this credit has been significantly increased to cover 100% of the administrative costs for businesses with up to 50 employees, with a maximum credit of $5,000 per year for the plan's first three years.

2. Automatic Enrollment Credit: 

A new tax credit has been introduced specifically for small employers that add automatic enrollment to their new or existing retirement plans. This credit is $500 annually and is available for three years after adding the feature. 

This credit is designed to encourage employers to adopt automatic enrollment, which has been shown to increase employee participation rates in retirement plans.

3. Credit for Small Employer Pension Plan Startup Costs for Joining an Existing Plan:

SECURE 2.0 provides a new credit for small employers that join a multiple employer plan (MEP) or pooled employer plan (PEP). This provision aims to make it more affordable for small businesses to offer retirement benefits by sharing administrative duties and costs across multiple employers.

4. Credit for Contributions to Employee Accounts: 

SECURE 2.0 introduces a credit for specific employer contributions to retirement plans, such as matching or non-elective contributions. The credit is available for up to three years and specifically targets small employers. 

It is calculated as a percentage of the contribution, up to a certain cap, and is intended to incentivize employers to contribute more to their employees' retirement savings.

These tax credits are designed to help small businesses reduce the financial burden of offering a retirement savings plan to their employees. They are also designed to make your retirement offerings more competitive so you can attract and retain top talent. 

Understand then Leverage

Comprehending the nuances of new regulations, technological advancements, or market trends can significantly enhance how effectively you meet your business goals and support your team. So, first understand and then leverage the over 90 provisions of SECURE 2.0 to boost employee satisfaction, engagement, and productivity. 

Find this challenging. That's why we are here. We can help you embrace the opportunity that SECURE 2.0 presents, educate you on its benefits, implement strategic changes, and watch as your organization reaps the rewards of enhanced loyalty and improved operational efficiency.

Ready to enhance your retirement benefits and become an employer of choice? Contact us today to discuss how you can integrate the SECURE 2.0 provisions into your benefits offerings and make a lasting impact on your employees' lives and loyalty. Let's ensure that your company meets and exceeds employee expectations with a forward-thinking benefits strategy.