- Now is the time. Thanks to the SECURE Act, we believe it has never been a better time to start a 401(k) plan. Beginning in 2021, employers with 100 or fewer employees are offered substantial tax CREDITS to start a plan. Tax credits are NOT deductions, they reduce your business’s tax liability dollar- for –dollar! Over a three year period, for qualifying employers, that is a maximum credit of $16,5002.
- Opportunity for tax deferral and tax deductions. Your organization’s employees (including yourself) can save taxes today through pre-tax contributions and let your money grow tax deferred. Although employer contributions are not required, they can help your bottom line. Employer matching and profit sharing contributions are tax-deductible and not subject to Social Security or Medicare taxes. These are two great options to consider when you are looking to reduce your business’ tax liabilities.
- Necessity to attract and retain top talent. Over 80% of Americans say that retirement benefits are a major factor in accepting a new employment offer3. Now more than ever, the availability of a retirement plan is an expectation, not a luxury. Investing early empowers Americans with future financial freedoms. With your help and the power of compounding interest, the earlier you start, the less your employees may have to save in aggregate to achieve retirement goals.
- Improve employees’ financial wellness. Nearly three-quarters of employees said that reducing employee stress was a key objective for 20204. In today’s environment, mental, physical and financial health are intertwined. Introducing a retirement plan to your overall benefits program will help employees feel more confident in their financial future, leading to a more focused and enthusiastic workforce.
- You don’t have to go it alone. The Department of Labor encourages employers to hire prudent experts to ease the fiduciary burdens of offering a retirement plan. This may sound expensive, but rest assured that Raymond James is committed to bringing the high quality, low cost solutions more typical of larger plans to the small business community.
EVERY ORGANIZATION, NO MATTER THE SIZE, SHOULD HAVE THE ABILITY TO OFFER A QUALITY 401(K) PLAN SO THAT EVERY WORKER CAN SAVE FOR RETIREMENT.
2Amount of the credit each year is limited to 50% of actual plan startup and administrative costs up to the greater of $500 or $250 multiplied by the number of non-highly compensated employees eligible to participate in the plan, up to $5,000, up to three years. An additional credit for $500 per year for the first three years is available to plans that meet the requirements of Eligible Automatic Contribution Arrangement (EACA). Maximum credit over 3 years of $16,500 is available to plans that cover at least 20 non-highly compensated employees and offer tautomeric enrollment. Your tax credit may be lower depending on your situation. Source: ADP 401k Essential
3 Source: 19th Annual Transamerica Retirement Survey of Workers,” April 2019
4 Source: Franklin Templeton’s “Voice of the American Worker” survey
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.