Retirement Security Boosted Through SECURE 2.0 Understanding

SecurityEmployers who understand SECURE 2.0 can help boost retirement security.  Americans’ confidence in their ability to save for retirement is waning due to inflation, volatile markets, and increasing interest rates.  A recent Nationwide Retirement Institute survey found that about 1 in 5 consumers are worried about getting off track with their retirement goals.  Small businesses—which employ nearly half of all U.S. workers— are dealing with similar economic challenges and are having trouble attracting and retaining top talent.

The SECURE 2.0 Act, passed in late 2022, allows small businesses to offer expanded retirement saving benefits for employees and helps these companies compete for the best and brightest.  Surprisingly, many small business owners don’t know about the provisions in this legislation and how it can help them attract and retain talent.  The same Nationwide survey, cited in a recent BenefitsPro article, found that two-thirds of small business owners are unaware that SECURE 2.0 increases the tax credit allowance for employers with 50 or fewer workers to 100% of employer retirement startup costs to be used in the year of credit.  That’s 50% more than the previous limit.

There’s also a new, additional credit for employer contributions made to a qualified plan.  These enhanced credits can potentially cover the costs of operating a small business retirement plan for up to three years, according to BenefitsPro.

SECURE 2.0 also allows employers to make matching contributions to workers’ retirement plans based on their qualifying student loan payments.  While offering such a benefit would be a great way to attract younger employees, many of whom are saddled with tens of thousands in student loan debt, 65% of small businesses and 38% of mid-sized businesses don’t have the expertise to implement this change in their retirement plans, according to the Nationwide survey.

Another provision included in SECURE 2.0, the Enhancing Emergency and Retirement Savings Act, allows workers to use their retirement savings for emergencies without penalty.  Employees can take one, penalty-free withdrawal of up to $1,000 per calendar year to cover emergency personal expenses.  Employees can repay those withdrawals over a three-year period.  Nationwide found that six in 10 small business owners and a third of mid-market owners didn’t know about this new provision.

SECURE 2.0 also extends retirement plan benefits to part-time workers.  Employees must have two years of consecutive part-time service to qualify.  The previous requirement was three years.

Familiarizing yourself with the new provisions in SECURE 2.0 can help you enhance your retirement plan benefit to attract and retain top talent.  In today’s tight labor market, offering competitive benefits that stand out can position you as an employer of choice and entice employees from all generations to join your organization for the long term.

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