SECURE Act 2.0 for Businesses

Building on the 2019 SECURE ACT, the 2022 Securing a Strong Retirement Act (commonly referred to as SECURE 2.0) was passed to help boost savings in workplace plans, extend support to small businesses that want to help employees prepare for retirement, and increase tax incentives for small businesses. Here are some of the corporate highlights.


SECURE 2.0 increases the startup credit to cover 100% (up from 50%) of administrative costs up to $5,000 for the first three years of plans established by employers with up to 50 employees. It also clarifies that small businesses joining a multiple employer plan (MEP) are eligible for the credit.


Beginning in 2025, 401(k) and 403(b) plans will be required to automatically enroll eligible participants, though employees may opt out of coverage. There is an exception for small businesses with ten or fewer employees and new companies less than three years old. The expansion of automatic enrollment will help more workers save for retirement, particularly younger, lower-paid workers.


Next year, employers who do not already offer retirement plans will be permitted to provide a starter 401(k) plan, or safe harbor 403(b) plan to employees who meet age and service requirements. Through the starter plans, the limit on annual deferrals would be the same as the IRA contribution limit, and employers may not make matching or nonelective contributions to starter plans.


Starting in 2025, employers will be required to allow part-time employees (workers with over 500 hours per year for two consecutive years) to participate in their retirement plan after two years of service. Employees with over 1,000 hours of service must be included after one year of service.

SECURE 2.0 also made numerous changes to how company retirement plans operate. You’ll need to understand how these changes will impact your business—especially if you want to include a retirement plan in your employee benefits package.

Easing Into Retirement Or Semi-Retirement

Retirement is not a single event. It is a process that begins long before you leave work and continues for the rest of your life. Here are some tips on how to transition into retirement and beyond.


Consolidate your retirement accounts for simplicity. Combining accounts makes managing your money and seeing the big picture easier.

Fewer accounts mean fewer monthly or quarterly statements, fewer companies to notify if you move or want to change beneficiaries, and possibly lower costs. It can also make calculating RMDs easier.


As you move away from working full-time, be sure your monthly and annual budgets are up to date. Include existing expenses that aren’t likely to change, such as groceries and utility bills.

Don’t forget to include new expenses you may incur in retirement. This includes healthcare costs your employer may have paid for or taxes when you withdraw from tax-deferred retirement accounts.


If it’s been a while since you’ve reviewed your estate planning documents, nearing retirement is a good time for a refresher.

While you may focus on ensuring your will and trust documents are up to date, don’t forget about your power of attorney, health care directives and guardian nominations.

If your retirement plans include relocating to a new state, consult an attorney in the new location to ensure your estate documents will be valid in that state. Having out-of-state documents can complicate trust and estate adminstration.

When you update your estate plan, remember to create a list of your accounts and assets and update that list as things change. It is not important to add a value to the account, as those change over time. Make sure to include the name and location of the account and the last four digits of the account number. It is one of the most important things you can do for your beneficiaries to avoid a time-consuming treasure hunt for your assets when you’re gone.

Retiring in a Slowing Economy

A well-thought-out plan for a comfortable retirement is important, even more so in a tough economy.


Start by looking at your spending habits for the last three years and determine if it’s sustainable for the next 20 years. Keeping in mind that most retirees take on a new hobby or activity that usually costs money. Travel, large home improvements, or restoring a classic car can cost thousands of dollars and stress your financial plan.


Plan to keep your portfolio diversified, and don’t try to time the market. Selling investments because they are down means you could miss out on a recovery. Stripping emotions out of financial decisions is vital but not always easy. If you’re not confident doing this on your own, work with your financial professional for guidance.


Spending in retirement requires flexibility. You may need to reduce your withdrawals when the market is slowing, but you can increase them when it recovers. Be sure to notice the warning signs of a slowing market, like rising interest rates and higher inflation.

Taxes in Retirement

With Social Security benefit payments increasing nearly 9% this year, you may need to rethink your retirement tax planning.


If you started working part-time to offset some of the recent price inflation, this increase in your Social Security payments might make some or more of it subject to federal income taxes. If you file as an individual and your combined income is between $25,000 and $34,000, up to half of your benefit may be subject to income taxes. Social Security defines combined income as your adjusted gross income, plus nontaxable interest, plus one-half of your Social Security benefit.


With the possibility of being in a higher tax bracket this year, due to increased Social Security benefits, consider cutting back on withdrawals from your qualified retirement plans. If you can avoid taking more than your required minimum distribution (RMD) in 2023, you might be able to limit your tax liability.

If you need more than your RMD, consider pulling funds from a taxable brokerage account where you’ll pay the lower long-term capital gains rates if you held investments for more than a year.

Also consider qualified withdrawals from a Roth IRA, a Roth 401(k), or a health savings account (HSA), which would not be subject to federal income tax and wouldn’t have an impact on how your Social Security benefit is taxed.

This year’s cost of living adjustment can help you keep up with higher prices. And in the short run, managing your withdrawals may help you smooth out the tax bumps during a period of high inflation.

Figuring out withdrawals from retirement and brokerage accounts can be complicated, so it may help to work with an advisor. But even if you do it yourself, try to withdraw from your Roth and HSA accounts last, allowing those assets to grow tax-free longer. Withdrawals from all three types of accounts in the same year can help manage combined taxable income.

Year-End Bonuses and Retirement Accounts

As the fourth quarter of 2022 is upon us, you may consider providing annual bonus payouts to your employees. It’s a great way to thank them for their hard work.

Once you settle on the bonus amounts, consider notifying each employee before you make the payments to provide them with a choice as to how they prefer to receive the funds. They could choose to take it as regular income or invest it in their retirement account.

If your company already has a 401(k) plan, depositing their year-end bonus will function like any other payroll deductions you make on their behalf.

If your employee has already maxed out their 401(k) contributions for the year, you may be able to send their bonus to their IRA.

Save Taxes on Retirement Plan Withdrawals

Tapping your retirement accounts before age 59½ usually comes with a 10% early distribution penalty, in addition to any income tax that’s due. But if you must make an early withdrawal, the IRS allows a few exceptions from the penalty.


If you have large medical expenses that your health insurance doesn’t cover, you can withdraw money from a 401(k) plan or traditional IRA to pay these bills. However, these medical costs must be greater than 10% of your adjusted gross income to avoid the 10% penalty.

Also, you can take withdrawals from a traditional IRA to cover health insurance premiums paid while unemployed. There are several conditions that need to be met to avoid the 10% penalty in this situation, so speak with your tax professional beforehand.


Becoming disabled and unable to work means you may be able to tap your tax-deferred retirement accounts without the 10% penalty to provide income that supplements your Social Security Disability or Supplemental Security Income benefits. You’ll need your physician to document and substantiate your disability to avoid the penalty.


If you are buying or building your first home, you can withdraw up to $10,000 — if you’re single, or $20,000 — if you’re married and both have a traditional IRA, without paying the 10% penalty.


Pulling contributions out of a Roth IRA to pay for higher education expenses for you or your dependents is always penalty-free. But withdrawal of Roth IRA earnings will be subject to the penalty if you don’t meet the exception requirements.


Being fully prepared for retirement requires financial planning and leveraging tax savings and the time value of money. Consider other cash sources like taxable brokerage accounts.

Employee Retirement Plan Selection

Offering an employer-sponsored retirement plan is one of the most effective ways to help workers save for retirement. And most provide tax advantages for both employers and employees.


The 401(k) is one of the most common plans employers offer because they’re fairly easy to set up. They also offer higher contribution limits than individual retirement accounts (IRAs). But they require more administrative work. An annual report must be filed with the Department of Labor to disclose the plan’s financial condition, investments, and plan operations.

Smaller employers can consider a Simplified Employee Pension (SEP) or SIMPLE retirement plan. Both are easier to maintain than a 401(k). The SIMPLE plan allows employees to contribute with pre-tax payroll deductions but is limited to companies with 100 or fewer employees. A SEP plan only permits employer contributions.


A federal tax credit of up to $5,000 for the first three years is available to eligible employers that start a new retirement plan. The credit is for ordinary and necessary costs to set up and administer the plan and educate employees.

To help workers save for retirement, an additional $500 credit is available for the first three years — if your plan has an automatic enrollment feature.

Remember, tax credits offset the amount of tax you owe dollar for dollar, but deductions only reduce your taxable income.


Offering to match employee plan contributions is a valuable perk you can use to attract and retain top talent. The good news is that your matching contributions are tax-deductible.

To start, you’ll need to determine when you’ll begin matching contributions (e.g., after the employee has worked for a year), when your contributions will vest, and how much your business can afford to contribute.

Meet with your financial professional for help deciding which plan is best for your company.

Retirement Plan Audits

If your company’s retirement plan has 100 or more eligible participants at the beginning of the plan year, you’ll generally need to have it audited by a qualified independent accountant each year.

A plan audit typically includes reviewing plan documents to verify they comply with IRS and Department of Labor rules, examining employee contributions to ensure money was remitted timely, confirming distributions and rollovers were paid out correctly, sampling specific participant’s transactions for plan compliance, and determining the accuracy of the information reported.

Keeping track of plan-related documents throughout the year—and for smaller companies experiencing steady growth, monitoring the number of active participants— are the simplest ways to prepare for an audit.

Are You Saving Enough For Retirement

Here are the average retirement account balances by ages, according to a Survey of Consumer Finances.* This chart clearly demonstrates that most Americans are not saving nearly enough for retirement. Fortunately, you do not have to be average. Working with your financial professional is your best chance of developing a realistic savings strategy that works for you.


  • Under 35: $13,000
  • 35-44: $60,000
  • 45-54: $100,000
  • 55-64: $134,000
  • 65-74: $164,000
  • 75 and up: $83,000

Getting FIRE’D

FIRE stands for Financial Independence, Retire Early. It’s a financial movement growing in popularity as more and more people seek to eliminate debt and build savings so they can retire earlier than usual. Regardless of your target retirement date, this movement focuses on some smart financial strategies:


One of FIRE’s focus is on eliminating all debt and reducing expenses. Paying off debt is the first step with a focus on not accumulating new debt. Start by scrutinizing how you spend your money to identify unnecessary expenses.


FIRE followers also look for ways to increase their income. Things like switching jobs for a significant pay increase, working side gigs or generating passive income from owning rental property add money toward the early retirement goal.


The last tenement of FIRE involves sound investing strategies. Start by maxing out retirement plan contributions. And if your employer offers a matching contribution, be sure you’re saving at least the minimum amount to get the maximum contribution.