President Donald Trump is poised to sign into law the Setting Every Community Up for Retirement Enhancement (SECURE) Act, a bill to help employers create and run retirement plans for workers. The measure was approved by the Senate on Dec. 19th as part of a year-end appropriations package.
As stated in an article published by the Society for Human Resources Management, among the provisions to encourage small businesses to become plan sponsors, the SECURE Act will:
- Allow unrelated small employers to band together in an “open” 401(k) multiple-employer plan (MEP), reducing the costs and administrative duties that each employer would otherwise bear alone.
- Increase the business tax credit for plan startup costs to make setting up retirement plans more affordable for small businesses. The tax credit will increase from the current cap of $500 to up to $5,000 in certain circumstances.
- Encourage small-business owners to adopt automatic enrollment by providing a further $500 tax credit for three years for plans that add auto-enrollment of new hires.
- Simplify rules and notice requirements related to qualified nonelective contributions in safe harbor 401(k) plans.
- Offer a consolidated Form 5500 for certain defined-contribution plans with a common plan administrator to reduce administrative costs, but also increase penalties for failure to file retirement plan returns such as Forms 5500, required notifications of changes and required withholding notices.
“The SECURE Act contains the most significant legislative enhancements to the private-sector retirement system in over a decade and will improve the retirement readiness of millions of Americans,” said Phil Waldeck, CEO of workplace solutions group at Prudential Financial, which administers retirement plans.”