Options for Plan Sponsors During the Pandemic & Beyond
The SECURE Act, implemented at the end of 2019, and the CARES Act, implemented in March of 2020, provided a number of new retirement plan provisions for plan sponsors to consider. During the pandemic, as some businesses and industries have struggled and others thrived, determining which of these new options makes sense to consider may be confusing for many plan sponsors. At ABG Southwest, we can help evaluate your company’s retirement plan goals and determine best next steps as you step in to 2021. The following is a summary of several retirement plan options you may wish to consider:
- Automatic Enrollment Tax Credit: The SECURE Act introduced a new tax credit of up to $500 per year for three years that will help employers either cover startup costs to convert existing retirement plans or set up new retirement plans to include an automatic enrollment feature. Automatic enrollment has proven to be a useful tool for many retirement plans to encourage retirement savings by employees.
- Safe Harbor Notices: Effective for plan years beginning after 12/31/19, the SECURE Act eliminates the need for plan sponsors to give safe harbor notices if they have a safe harbor retirement plan with only non-elective contributions (non-elective plans provide a specified level of employer contributions without requiring employee contributions). This may be helpful in streamlining administrative duties and resources.
- Financial Wellness: During this unprecedented pandemic and the resulting economic and business challenges, many plan sponsors are increasing their emphasis on financial wellness resources to help plan participants navigate the pandemic’s financial impact.
- Employer Startup Retirement Plan Tax Credit: The SECURE Act increased the tax credit to offset small business retirement plan startup costs from $500 per year up to $5,000 per year for three years. This is an additional incentive for companies considering new plans for new employee populations not previously covered by a retirement plan.
We Welcome Your Questions
Your ABG Southwest advisor is available to help you with any questions you may have about any SECURE Act or CARES Act related issues. This is not an all-inclusive list and your trusted advisor is the best source for how the SECURE Act and CARES Act provisions may apply to your retirement plan. Contact us, here.