A retirement plan can represent a big expense for employers, especially small businesses. The government has developed valuable tax benefits that are specifically aimed at helping the smallest companies — those with less than 100 employees
Small businesses can claim this $500 credit for using an auto-enrollment feature in their 401(k) plan. This applies to both new and existing plans, so even if you have had a plan in place for many years, adding this provision triggers the tax credit for 3 years. Who is eligible for the credit?Have less than 100 employees that were paid at least $5000 in the prior year Meet the Eligible Automatic Contribution. Arrangement (EACA) criteria.
Use an automatic enrollment feature A QACA Safe Harbor plan will meet the EACA requirements.
Beginning in 2025, almost all 401(k) plans will be required to use an auto-enrollment feature.
For a comprehensive review of your personal situation, always consult with a tax or legal advisor. Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.