SECURE and the SEQUEL: Saving the day one giant retirement plan tax credit at a time

The SECURE Act sprung on the scene in late 2019 and gave tax credits a new hero available to help defray plan start-up costs beginning in 2020. The long-anticipated sequel, SECURE 2.0, released in December 2022, recast this favorite A-lister, and kicked her up a notch.

Wham, pow! Tax Credit starts saving small businesses even more from Big Tax in 2023.

In the original, any plan sponsor with 100 or fewer employees could claim a credit of up to 50% of the plan’s start-up costs or expenses, limited to $5,000, for three years.

Now, Tax Credit truly helps the “little guy” with 50 or fewer employees by crediting up to 100% of these expenses. Tax Credit has limitations though, to the lesser of $5,000, or the greater of $250 per non-highly compensated employee or $500, for each of the first three years.

Hero disclaimers

Plan expenses include costs associated with the establishing and/or administering the plan in these first few years. This also includes costs to educate employees! Owner-only plans cannot claim the tax credit. Also, the plan must benefit at least one non-highly compensated employee.

A big deal

SECURE 2.0 and its hero, Tax Credit, can save small business owners up to $50,000 when establishing a retirement plan. No wonder SECURE 2.0 is a box office hit!

Want to know more about these credits? Fill out the form below and we’ll send you a one page overview with more details!

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