As SECURE 2.0 feels more like a reality now that President Joe Biden passed the spending bill into law, more companies are commenting on what the legislation means for small business retirement plans and its participants.
Chad Parks, founder and CEO of Ubiquity, a 401(k) provider for small businesses, said he’s eager to see how small businesses respond to government reimbursement for new 401(k) plans. Under SECURE 2.0, small businesses who open a 401(k) plan will be given three years of government reimbursement for new startup and administrative fees.
“At a time when small business owners and their employees need every bit of support they can get to save for retirement, this part of SECURE Act 2.0 puts the government in a position to provide significant assistance to every small business in America. There’s no more excuse as to why a small business should not open a 401(k) plan for themselves and their employees,” said Parks.
Parks compares its potential effect to that of past government assistance programs, including healthcare initiative Obamacare. “I think this will have a similar impact to the financial services sector as Obamacare had to the health care sector – it truly is transformative in the access and democratization of retirement savings opportunities,” he said.
In addition to the reimbursement program, small businesses will be required to automatically enroll employees and will receive $1,500 in tax credits over three years as a result. Other provisions the Ubiquity team says they anticipate seeing include:
- Additional tax credits for employers to offset up to $1,000 of employer matching contributions
- Savers tax credit for eligible incomes
- Part-time employee eligibility to participate in a retirement plan sooner under certain criteria
- Higher contribution limits for Safe Harbor small business 401(k) plans
- Increased savings limits for Americans who are close to their retirement age
SEE ALSO:
- 8 Ways SECURE 2.0 Will Enhance Retirement
- How SECURE 2.0 Will Benefit Public Sector Workers
- RMD Age Increases to 73 in 2023 Under SECURE 2.0
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
