6 Things Business Owners Should Know About the SECURE Act

Previous Law SECURE Act
Deadline to adopt new plan: December 31st Deadline to adopt new plan: tax filing deadline
No tax credit for including automatic enrollment Tax credit up to $500 per year for three years for plans including automatic enrollment  
Auto-enrollment max contribution: 10% Auto-enrollment max contribution: 15%
Tax credit for 50% of necessary eligible startup costs up to a maximum of $500 for three years   Tax credit for $500Or,The lesser of:$250 times the number of non-highly compensated employees$5,000
Regulatory violation of one company could jeopardize MEP eligibility Regulatory violation of one company does not jeopardize MEP eligibility
Part-time employee eligibility: 1000 hours over 12-month time period Part-time employee eligibility: 1000 hours over 12-month time period or 500 hours for 3 consecutive years

Our recent post on the SECURE Act focused on the way retirement plans and 529 plans will be affected beginning in 2020. In this article, the focus will be how the SECURE Act will affect small businesses and employers. Given the emphasis on retirement enhancement within the Act, there are many advantages for small business employers or employees to begin, or accelerate, saving for retirement.

It has been common for small businesses to be hesitant before starting a retirement plan. Now, employers beginning retirement plans will have an extended deadline to adopt a new plan. The new deadline for an employer to adopt a plan is their tax filing deadline, compared to the previous December 31st deadline. Another area that enhances retirement planning is auto-enrollment. When an employer includes auto-enrollment in their new plan adoption, they can take advantage of a $500 tax credit. Additionally, the auto-enrollment max contribution percentage increased from 10% to 15%. This allows employers to prompt employees that would otherwise neglect contributing into a retirement plan.

Another major advantage is the increased tax credit for retirement plan startup costs. Businesses with 100 or fewer employees may be able to receive a tax credit up to $5,000 per year for three years. This tax credit was previously capped at $500 per year, meaning businesses could enjoy increased savings of up to $13,500 over a three-year timespan.

Small businesses have the ability to create a pooled plan where multiple companies can form one retirement plan. Changes to multiple employer plans will create an easier way for small businesses to join together. Previously, companies that created multiple employer plans had to be comprised of related employers. Now, unrelated companies will be able to group together when forming these plans. In the past, any single employer who had a regulatory violation would jeopardize the eligibility of the entire pooled plan. Going forward, even if one employer has a regulatory violation, the plan can keep its multiple employer plan status. This change should bring comfort to employers debating whether to join these types of plans.

Part-time employees now have additional opportunity to participate in retirement plans. They will be eligible to participate if they work 500 hours for 3 consecutive years.

Marshall Financial Group can assist you in gaining a better understanding of the SECURE Act and how it may affect your situation. Our professionals can help determine if there are any opportunities you could be taking advantage of. Click here to contact an advisor.


Marshall Financial Group, Inc (“Marshall Financial”) is an SEC-registered investment adviser with its principal place of business in Doylestown, Pennsylvania.   This newsletter is limited to the dissemination of general information pertaining to Marshall Financial Group’s investment advisory services.  Investing involves risk, including risk of loss.  References to market indices are included for informational purposes only as it is not possible to directly invest in an index. The historical performance results of an index do not reflect the deduction of transaction, custodial, and management fees, which would decrease performance results. It should not be assumed that your account performance or the volatility of any securities held in your account will correspond directly to any comparative benchmark index.

This newsletter contains certain forward‐looking statements (which may be signaled by words such as “believe,” “expect” or “anticipate”) which indicate future possibilities. Due to known and unknown risks, other uncertainties and factors, actual results may differ materially from the expectations portrayed in such forward‐looking statements. As such, there is no guarantee that the views and opinions expressed in this letter will come to pass. Additionally, this newsletter contains information derived from third party sources. Although we believe these sources to be reliable, we make no representations as to the accuracy of any information prepared by any unaffiliated third party incorporated herein, and take no responsibility, therefore.

For additional information about Marshall Financial, please request our disclosure brochure as set forth on Form ADV using the contact information set forth herein, or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov).  Please read the disclosure statement carefully.