There is a
bill making its way through the U.S. Congress that will
incentivize small businesses to start retirement plans for
their employees.
The bill, known as the Setting Every Community Up for
Retirement Enhancement Act of 2019 (The SECURE Act) gives
the following credits to small businesses:
-Small Businesses can get from $500 to $5,000 in tax credits
for three years to defray the cost of setting up retirement
plans for their employees.
-Under the plan employers can also get a $500 tax credit per
year, for three years, to setup a new automatic enrollment
plan or convert an existing plan to an automatic enrollment
plan.
The bill will enable employees to move their retirement
plans from their former employers to their new employers
when they change jobs.
It will also allow employees to make contributions to the
plan for a longer period of time (up to 72 years old).
Under this new plan employers will be required to enroll
part-time employees.
Employers maintaining a 401(k) plan will be required
to allow long-term part-time workers to participate in the
plan if the employee complete either a one year of service
requirement (with the 1,000-hour rule) or three consecutive
years of service where the employee completes at least 500
hours of service.
There will be penalties for failure to file retirement plan
returns. The
legislation modifies the failure to file penalties for
retirement plan returns. The Form 5500 penalty would be
modified to $105 per day, not to exceed $50,000. Failure to
file a registration statement would incur a penalty of $2
per participant per day, not to exceed $10,000. Failure to
file a required notification of change would result in a
penalty of $2 per day, not to exceed $5,000 for any failure.
Failure to provide a required withholding notice results in
a penalty of $100 for each failure, not to exceed $50,000
for all failures during any calendar year.
The bill was supported by Democrats and Republicans and
hence is likely to pass both the House and Senate and make
its way to the President’s desk soon.
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