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This is the fourth in a series of articles describing key provisions of the SECURE Act, with a focus on incentives for small employers. One of the objectives of the SECURE Act is to promote the adoption of employer-sponsored retirement plans. It offers three ways aimed at helping small employers bring retirement plans to their employees, which we will discuss below.
Some of the changes under the SECURE Act are effective immediately, while others are effective in plan or tax years beginning on or after January 1, 2020. The Act provides for a remedial plan amendment period that does not end until the last day of the 2022 plan year (the 2024 plan year for governmental plans). Therefore, plan sponsors generally have sufficient time to amend plan documents to comply with any required or optional changes. Nevertheless, employers must modify certain aspects of plan administration (and potentially financial planning decisions) now to align with the SECURE Act's more immediate changes.
Incentives for small employers
A key objective of the SECURE Act is to encourage small employers to make retirement plans available to their employees. The SECURE Act offers a tax credit for new plans, an automatic enrollment credit and the option of pooled employer plans.
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