Everyone agrees that we need to make retirement plans available to as many Americans as possible. Can we make it easier and also encourage small business owners to act on it?
As of 1/1/2020 the answer is “yes” thanks to the SECURE Act passed 4 weeks ago in D.C.
Recently the state of CA passed a retirement plan mandate called “CalSavers” with the first deadline looming 6/30/2020. All companies 5 or more employees must have a retirement plan or use the CA state-designed, state-run Roth IRA program in Sacramento. The program is not impressive, read more here. It’s not necessarily a good thing.
Then miraculously the federal government passed the “SECURE Act” on Dec. 20, 2019 which contains two very important elements to help small businesses.
So state mandate meets excellent federal legislation and CA small business employees are BIG WINNERS.
First the SECURE Act allows “CO-OP” plans, referred to as PEPs (pooled employer plans) which allow thousands of employers to bring billions of dollars to the 401k market. The 401k provider market rolls out the red carpet to compete for big money, which ushers in low prices coupled with top notch concierge service and the lowest liability available today.
O’Reilly Wealth Advisors already has the precursor to such a plan. OWA’s plan is already in place and already has the SIZE to provide the benefit. It will become a PEP soon after the IRS releases final details and guidance. New PEPs started because of the new law will take years to obtain the necessary size to demands the benefits.
Secondly the federal SECURE Act authorizes an increase in start-up plan tax credits of up to 900%, from $500 to $5000 for the each of the first three years depending on the number of employees.
See more on the SECURE Act here.
This is great news for the entire country and even more so in states like California that are mandating small business to offer retirement plans.
See O’Reilly Wealth Advisors on this topic at:
Inaugural San Diego Business Summit, Thursday, January 23, 8 am to 3 pm, Palomar College Education Center, 1111 Rancho Bernardo Road, San Diego, 92127. Put on by the North San Diego Business Chamber.
Carlsbad Chamber Retirement Plan Workshop, Monday, February 24, 12:30 to 2 pm, at 5934 Priestly Dr, Carlsbad, 92008