Why is a Company Retirement Plan Important?
Formula: $250 * the number of eligible employees, not to exceed $5,000
1. Autoenrollment Credit: $500
2. Employer Contribution Credit: Per-employee cap of $1,000 (50 or fewer employees) declining scale over 5 years.
100% in Year 1 & 2
75% in Year 3
50% in Year 4
25% in Year 5
Qualifying Questions:
1. Do you have 10 or more employees?
2. Company has been established for at least 2 years
3. No tax-qualified retirement plans
==> You are required to set up a RETIREMENT PLAN or fall under the NY State Automatic IRA Reduction Plan.
Secured Act 2.0 Start-up Credit, Employer Contribution Credit, Auto-enrollment Credit
The earlier you start conributing, the more your money can grow through compounding
Attract top talent and increase employee productivity and loyalty
Benefits from Secured Act 2.0
Interview with Michael Van Husen, Paychex
It has lower contribution limits since it is an IRA. It also does not allow employer contributions, making 401(k) plans more preferable for both employer and employees.
The State sponsored IRA will be Roth, so no Pre-Tax saving option for high income earners.
Failing to comply can result in significant penalties starting at $250 per employee in the first year, escalating to $1,000 per employee by the third year of non-compliance.
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