Maximize Tax Savings with the SECURE Act: A Guide for Small Businesses
Unlock Tax Benefits While Supporting Your Employees’ Retirement
As a small business owner, you’re always looking for ways to optimize your finances while attracting and retaining top talent. The Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019 and its follow-up, SECURE 2.0 (2022), offer powerful opportunities to achieve both goals by providing tax credits for establishing retirement plans, such as Simplified Employee Pension (SEP) IRAs or SIMPLE IRAs, for your employees. Here’s how you can leverage these laws to save on taxes and boost your workforce’s financial future.
Why Offer IRAs? Tax Credits and More
The SECURE Act makes it easier and more affordable for small businesses with up to 100 employees to set up retirement plans. By offering SEP or SIMPLE IRAs, you can:
Claim Enhanced Tax Credits: The SECURE Act increases the startup cost tax credit from $500 to up to $5,000 for the first three years of a new retirement plan. If you implement automatic enrollment, you can claim an additional $500 credit, offsetting administrative costs.
Earn Matching Contribution Credits: SECURE 2.0 provides a tax credit of up to $1,000 per employee (earning less than $100,000) for employer matching or profit-sharing contributions to IRAs or 401(k) plans. This credit phases out over five years and is reduced for businesses with 51–100 employees.
Deduct Contributions: Contributions to employee SEP IRAs are tax-deductible, reducing your taxable income. For 2024, you can contribute up to 25% of an employee’s compensation (up to $345,000) or $69,000, whichever is less.
Attract and Retain Talent: Offering retirement benefits makes your business more competitive in today’s job market, helping you recruit and keep skilled employees.
SEP vs. SIMPLE IRAs: Which Is Right for You?
SEP IRA: Ideal for businesses of any size, including sole proprietors. Only employers contribute, up to 25% of an employee’s compensation. SEP IRAs are flexible, with no annual contribution requirement, and easy to set up through a bank or financial institution.
SIMPLE IRA: Best for businesses with fewer than 100 employees. Employees can contribute up to $16,000 in 2024 ($19,500 if age 50 or older), and employers must match contributions (up to 3% of compensation) or make a 2% nonelective contribution. SECURE 2.0 allows Roth SIMPLE IRAs for after-tax contributions.
Both options are low-cost and have minimal reporting requirements, making them accessible for small businesses.
Additional SECURE Act Benefits
Payroll Deduction IRAs: If you’re not ready to sponsor a full plan, you can offer payroll deduction IRAs, allowing employees to contribute to their own IRAs (up to $7,000 in 2024, or $8,000 for those 50+). This is a simple, no-cost way to provide retirement benefits without employer contributions.
Pooled Employer Plans (PEPs): The SECURE Act allows small businesses to join Multiple Employer Plans, reducing administrative costs by sharing resources with other employers.
Student Loan Matching: Starting in 2024, SECURE 2.0 permits matching contributions to employee 401(k)s or IRAs based on their student loan repayments, helping younger workers save for retirement while paying off debt.
Take Action Today
Setting up a retirement plan is easier than you think. Consult with a financial advisor or certified public accountant to choose the right plan for your business and maximize tax savings. You can set up a SEP IRA as late as the due date of your tax return (including extensions) or a SIMPLE IRA between January 1 and October 1 of the plan year.
Ready to save on taxes and empower your employees? Contact GHST Capital online at www.ghstcapital.com to learn how we can help you implement a SECURE Act-compliant retirement plan tailored to your business.
Disclaimer: Consult a tax professional for personalized advice. Information is based on current regulations as of June 2025 and may change.
