Secure Act 2.0 - Two Big Tax Credits for Small Businesses | Rob.CPA

In this video, I will discuss Secure Act 2.0 as it relates to small businesses and its benefits to them.

The first change, effective 1/1/23, the Secure Act 2.0 allows employers to offer small financial incentives (de minimus gift cards) to help boost employee participation in the company’s retirement plans, like its 401K.
The second change, beginning 1/1/23, businesses with 50 employees or less can qualify for a credit equal to 100% of the administrative costs (educational costs too) for establishing a workplace retirement plan (SEP, Simple IRA or a qualified plan (401K), profit sharing plans) for up to three years. Prior to the Secure Act 2.0, the tax credit was equal to 50% of administrative costs for companies of 100 employees or less. The credit was capped at the lesser of (1) 50% of the admin costs or (2) $5,000.
The third change, beginning 1/1/23, businesses with up to 100 employees might be entitled to a tax credit based on employer contributions for the first 5 company tax years, starting with the first year the small-employer pension plan starts (does not include defined benefit plans). The amount of the credit would be increased by the applicable % of employer contributions up to $1,000 per employee. The applicable %s are: 100% for the first and second years, 75% in the third year and 50% in the fourth year and 25% in the fifth year. For companies with employees 51-100 employees, the credit gets phased out. For companies with 50 or fewer employees are eligible for 100% of the credit. There is no credit for employer contributions on behalf of an employee who makes more than $100,000.

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Rob CPA channel was created with a mission to provide viewers with accurate content so they can be proactive in their tax planning strategies and build financial wealth. The video topics I selected reflect real-world issues that I’ve seen our clients experience relating to their personal tax returns, retirement plans, and accounting.

The channel allows me to share my passion for taxes, personal finance, and accounting. I create content I wish schools and entrepreneurship programs/accelerators would teach their students and companies. I take complex topics and simplify them for the viewers as well as show examples.

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