Maximizing Retirement Savings in 2024: A Guide to Secure 2.0 Act Benefits for Small Businesses

The Secure 2.0 Act, passed in December 2022, represents a significant evolution in retirement planning and savings strategies in the United States. This comprehensive piece of legislation builds upon the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, introducing new provisions aimed at increasing Americans’ access to retirement savings plans and enhancing the features of existing plans. The act is vast, touching on various aspects of retirement savings, from expanding automatic enrollment in employer retirement plans to adjusting age limits for certain retirement account contributions.

This article will focus on the key components that went into effect in 2023, those slated for implementation in 2024, and will pay special attention to the new tax credits for small employer startup retirement plans, a critical aspect for many small business clients.

Secure 2.0 Act: Effective in 2023

Several provisions of the Secure 2.0 Act became effective immediately in 2023, laying the groundwork for broader retirement savings participation and flexibility. These include:

  • Increased Age for Required Minimum Distributions (RMDs): The age at which retirement plan participants are required to start taking distributions was increased from 72 to 73, allowing for a longer accumulation period of savings.
  • Emergency Savings Accounts: Employers can now offer emergency savings accounts linked to their retirement plans, capped at $2,500, to encourage saving for unexpected expenses without dipping into retirement funds.
  • Student Loan Payments as Retirement Contributions: The act allows for the treatment of student loan payments as elective deferrals for the purpose of matching contributions in a retirement plan. This provision helps individuals burdened by student loans to still benefit from employer match programs, even if they cannot contribute directly to their retirement accounts. Learn more here.
  • Catch-Up Contribution Changes: For individuals aged 60 through 63, the catch-up contribution limit to retirement plans will increase, encouraging higher savings rates as retirement approaches.

Secure 2.0 Act: Effective in 2024

The Secure 2.0 Act also lays out several provisions that will take effect in 2024, further expanding the retirement savings landscape. These include:

  • Automatic Enrollment in Retirement Plans: Employers starting new 401(k) and 403(b) plans will be required to automatically enroll employees at a rate of 3% to 10% of their salary, although employees can opt out. This is expected to significantly increase participation rates in employer-sponsored retirement plans.
  • Saver’s Match: The act transforms the nonrefundable saver’s credit into a government matching contribution of up to 50% of the first $2,000 of an individual’s retirement plan or IRA contribution, payable directly into the individual’s retirement account.

New Tax Credits for Small Employer Startup Retirement Plans

One of the most impactful provisions for small businesses is the enhancement of tax credits for small employers establishing new retirement plans. The Secure 2.0 Act significantly increases the startup cost credit, making it more financially feasible for small businesses to offer retirement savings options to their employees. Here’s a detailed breakdown:

  • Increased Credit Amount: Prior to Secure 2.0, small businesses could claim a tax credit for the costs associated with starting a retirement plan, capped at $500 per year. The Secure 2.0 Act increases this credit to cover 100% of startup costs for businesses with up to 50 employees, up to a maximum of $5,000 per year for the first three years.
  • New Tax Credit for Employer Contributions: In addition to the startup cost credit, a new tax credit has been introduced for small employers (up to 50 employees) that equals 100% of employer contributions on behalf of employees, up to $1,000 per employee. This credit phases out from 100% to 50% for employers with 51 to 100 employees.
  • Credit for Adding Auto-Enrollment: Small employers that add an automatic enrollment feature to their retirement plans can claim an additional tax credit of $500 per year for three years, providing an extra incentive to adopt this feature that increases employee participation rates.

These enhanced credits are designed to lower the barrier for small businesses to establish and maintain retirement plans, providing a dual benefit: helping small businesses attract and retain talent by offering competitive benefits and increasing the overall retirement security for American workers.


The Secure 2.0 Act represents a landmark shift in retirement savings policy, with a particular emphasis on expanding access and incentives for both employers and employees. For small business clients, the enhanced tax credits for starting up and contributing to retirement plans offer a significant financial incentive to bolster retirement benefits for their employees. By understanding and leveraging these provisions, small businesses can not only improve their benefits offerings but also contribute to the broader goal of enhancing retirement readiness for all Americans.

February 26, 2024

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