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When 2020 began, business owners found significant changes in the way they may run their qualified retirement plans, thanks to the Setting Every Community Up for Retirement Enhancement (SECURE) Act. Whether or not you sponsor a plan, here is some of what you may want to know about the new law:
Employers, however, are now required to file an annual disclosure notifying employees of their projected retirement income, calculated as if the plan balance were invested in an annuity. Additionally, part-time employees who worked at least 500 hours each year for three straight years are newly eligible to contribute.
And if you already sponsor a 401(k), SIMPLE IRA or other qualified plan, you may be eligible to take a $500 credit a year for three years of auto-enrolling new employees. Another new safe harbor involves the automatic enrollment escalation cap, which rises from 10% to 15% of pay— a boon for late savers.
Finally, the SECURE Act reduces some of the red tape and compliance issues that prevented small businesses from adopting qualified retirement plans in the past. So, if you don’t yet offer a retirement plan, you might want to examine one in light of these changes.
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Securities and Investment Advisory Services offered through Geneos Wealth Management, Inc. Member FINRA/SIPC.
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