How the SECURE Act 2.0 Will Impact Business Owners in 2025

The SECURE Act 2.0, enacted to enhance retirement savings and accessibility, introduces changes that will significantly impact business owners starting in 2025. These provisions aim to expand retirement plan participation while offering incentives for employers, but they also create new administrative challenges. Here’s what business owners need to know.

Mandatory Auto-Enrollment in Retirement Plans

Beginning in 2025, all new 401(k) and 403(b) plans must automatically enroll eligible employees at a contribution rate of at least 3% of their salary, increasing annually up to 10%, unless employees opt out.

Impact on Business Owners:

• Increased Plan Participation: Employers can expect higher participation rates, improving overall employee financial well-being.

• Administrative Adjustments: Employers must implement systems for automatic enrollment, adding to operational complexity.

• Financial Implications: Employers matching contributions may face increased payroll expenses as contributions rise​

• Expanded Tax Credits for Small Businesses Small businesses with up to 50 employees are eligible for enhanced tax credits, covering 100% of administrative costs for starting a retirement plan (up to $5,000 per year for three years). Additionally, a credit of up to $1,000 per employee can offset employer contributions.

  
  

Benefits for Small Business Owners:

• Lower Entry Barriers: This makes retirement plans more affordable for small businesses previously unable to offer them.

• Competitive Edge: Offering a retirement plan helps attract and retain talent in competitive job markets. Student Loan Matching ContributionsThe SECURE Act 2.0 allows employers to match employees’ student loan payments with contributions to their retirement accounts.