There has been much discussion in Congress over the last few years on how to update and reform retirement saving rules. The unfortunate reality is that many Americans will not have enough to retire. It is a serious issue when one considers that the average working household has virtually no retirement savings. Several studies have illustrated the depth of the problem and just how many will be forced to work beyond the traditional retirement age. The lack of access to workplace retirement plans and limited savings have intensified the issue.
In late December 2022, President Biden signed the Consolidated Appropriations Act of 2023 into law. While primarily a funding bill for the federal government, it also contained another important parcel of legislation – the SECURE Act. 2.0. Building upon the reforms made in 2019, it calls for several changes designed to expand access, enhance eligibility, and make it easier to save for retirement. While several provisions focused on issues germane to large corporations, there were also several important provisions that impacted small businesses. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.
Retirement savings is an especially tricky matter for small businesses. While offering a 401(k), or other employer-sponsored retirement plan is beneficial for employee recruiting and retention, it can also be quite expensive. A recent study of 500 small businesses found that 74% do not offer a workplace retirement plan. When asked why respondents indicated that 58% believe the business is too small to qualify 32% can’t afford the match, and 24% believe these plans are too expensive to set up and manage. The concerns about cost are a serious obstacle.
There were several provisions included in the legislation designed to reduce the cost of starting and maintaining a retirement plan, including:
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SECURE Act 2.0 made many updates designed to expand retirement-saving opportunities. However, there were several changes benefitting small businesses that need to be considered. If you have questions about the information outlined above or need assistance selecting and starting a new retirement plan, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.
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