How the Employer Contribution Credit Can Benefit Your Business
The SECURE 2.0 Act introduced a range of incentives for small and mid-sized businesses to make retirement savings more accessible. Among them is the Employer Contribution Credit — a little-known but highly valuable tax credit that directly reduces an employer’s tax liability.
What Is It?
The Employer Contribution Credit is a tax credit (dollar-for-dollar reduction in taxes owed) that helps offset the costs associated with:
Establishing a new retirement plan
Covering plan administration expenses
Making employer contributions into the plan
Who Qualifies?
Typically, businesses with 100 or fewer employees who earned at least $5,000 in the prior year are eligible. The credit phases down as the business size grows.
How Much Can You Save?
The credit amount can vary depending on the size of your business and the level of employer contributions, but the benefits can be substantial. Recently, a client we worked with received a $12,000 tax credit through this provision.
Why It Matters:
Encourages retirement savings participation among employees
Provides financial relief for business owners offering plans
Strengthens employee loyalty and recruitment efforts
The Employer Contribution Credit is just one of many strategies available under SECURE 2.0 to make retirement planning more attractive for employers. If you’re considering starting or enhancing a retirement plan for your team, now is the time to evaluate your options with William Allan.
Nothing contained herein this letter should be considered investment advice, research or an invitation to buy or sell any securities
