Retirement Plans May Be More Affordable Than You Think

How SECURE 2.0 Tax Credits Can Help Small Businesses

For many small business owners, offering a retirement plan has always sounded like a good idea. The challenge has often been cost.

Between startup expenses, administration, employer contributions, and ongoing responsibilities, some employers have assumed a retirement plan would be too expensive or complicated to pursue.

SECURE 2.0 Act was designed, in part, to address those concerns. The legislation created tax incentives intended to help eligible employers offset retirement plan costs while expanding access to workplace retirement savings.

For business owners who have never offered a retirement plan or have postponed the decision because of cost concerns, these incentives may make it worth taking another look.

The Biggest Opportunity: SECURE 2.0 Act Tax Credits

SECURE 2.0 Act provides incentives tied to:

Establishing a retirement plan

Making eligible employer contributions

Implementing a qualifying automatic enrollment feature

Providing qualifying retirement-plan benefits for military spouses

These credits can help address financial barriers that have historically made retirement plans feel out of reach for some small businesses.

Retirement Plan Startup Credit

Eligible employers with 50 or fewer employees may qualify for a credit equal to 100% of eligible startup costs, subject to IRS limits. Eligible employers may receive up to $5,000 per year for the first three years, creating potential startup credits of up to $15,000.

Employers with 51 to 100 employees may qualify for a credit equal to 50% of eligible startup costs, subject to the applicable IRS limit. Eligible expenses may include the ordinary and necessary costs of establishing and administering the plan and educating employees about it.

Employer Contribution Credit

SECURE 2.0 Act also introduced a credit tied to eligible employer contributions made on behalf of employees. For certain qualifying employers, the credit may be worth up to $1,000 per eligible employee annually, subject to employee-count thresholds, compensation limits, contribution limits, and phase-down rules.

For business owners who want to contribute to employee retirement accounts, this credit may help offset part of that cost during the plan’s early years.

Additional Credits

Eligible employers may also qualify for:

An automatic enrollment credit of up to $500 per year for up to three years

A military spouse participation credit of up to $500 per qualifying military spouse per year, subject to plan and eligibility requirements

SECURE 2.0 Act Tax Credit Opportunities for Small Employers

Tax Credit	Potential Benefit	Duration
Retirement Plan Startup Credit	Up to $5,000 annually, subject to eligible costs and IRS limits	First 3 years
Employer Contribution Credit	Up to $1,000 per eligible employee annually, subject to IRS rules and limits	Up to 5 years
Automatic Enrollment Credit	Up to $500 annually	Up to 3 years
Military Spouse Participation Credit	Up to $500 annually per qualifying military spouse	Up to 3 tax years per spouse

Eligibility requirements, employee-count thresholds, compensation limits, contribution limits, and other restrictions apply. Employers should consult qualified tax and legal professionals regarding their specific circumstances.

Benefits Beyond the Credits

The tax incentives may help make a retirement plan more attainable, but the potential business-owner benefits extend beyond the credits. A thoughtfully designed retirement plan may help:

Strengthen the employee benefits package

Support recruitment and retention

Create retirement savings opportunities for owners and key employees

Give employees access to education and retirement guidance

Depending on the business and its goals, available strategies may include a 401(k) plan, a defined benefit plan, or a combination of qualified retirement plans.

Is It Time to Revisit a Retirement Plan?

Business owners who previously assumed a retirement plan was too expensive may find that today’s tax-credit environment changes the conversation.

If your business does not currently offer a plan, consider asking:

Could the business qualify for startup or employer contribution credits?

Which qualified retirement plan structure fits the business and workforce?

How could employer contributions affect cost and employee value?

What employee education and guidance would help make the plan successful?

How SWBC Wealth Management Can Help

SWBC Wealth Management works with small business owners who are evaluating or establishing qualified retirement plans. Our team can help:

Evaluate qualified retirement plan options

Design and implement 401(k) and defined benefit plan strategies

Assess available SECURE 2.0 incentives with the business’s tax and legal professionals

Provide employee education and retirement guidance

Coordinate retirement strategies for business owners and key employees

A successful retirement plan combines thoughtful design with the employee education and guidance needed to help participants understand and use the benefit.

If cost or complexity has kept your business from moving forward, connect with an SWBC Wealth Management Advisor to explore whether today’s retirement-plan incentives and strategies could fit your business.

Investment Disclosures
Investing involves certain risks, including possible loss of principal. You should understand and carefully consider a strategy’s objectives, risks, fees, expenses and other information before investing. The views expressed in this commentary are subject to change and are not intended to be a recommendation or investment advice. Such views do not take into account the individual financial circumstances or objectives of any investor that receives them. This information should not be considered a solicitation nor a recommendation of an offer to provide any service in any jurisdiction where it would be unlawful to do so under the laws of that jurisdiction. Past performance is no guarantee of future results. Please consult with your individual tax professionals and/or attorney for additional information. © 2025 SWBC. All rights reserved. Securities offered through SWBC Investment Services, LLC, a registered broker/dealer. Member FINRA & SIPC. Advisory services offered through SWBC Investment Company, a Registered Investment Advisor, registered as such with the US Securities & Exchange Commission. SWBC Investment Services, LLC is under separate ownership from any other named entity. SWBC Investment Services, LLC a division of SWBC, is a nationwide partnership of advisor. SWBC Life Insurance

Related Categories

Retirement Plan Services Recruiting & Employee Retention Retirement & Succession Plans

Kyle Hittle, Wealth Advisor

As Wealth Advisor, Kyle joined SWBC in 2020 after obtaining his master’s degree in Business Administration from the University of the Incarnate Word (UIW.) He brings valuable expertise to the financial industry with a strong background in institutional retirement planning and is committed to helping clients achieve their financial goals and secure their futures. Kyle combines personalized strategies with in-depth market knowledge to guide clients through every stage of their financial journey. Kyle enjoys giving back to the community and looks forward to participating in SWBC activities and community service projects. During his spare time, he enjoys spending time with family and friends. He holds FINRA Series 7, 63, 65, and 99 licenses. Check the background of this investment professional on FINRA's BrokerCheck.