SECURE Act Changes: What Small Businesses Need to Know

Running a small business means juggling countless responsibilities, and employee retirement benefits might seem like just another complex challenge. But recent federal legislation called the SECURE Act has actually made it easier for small businesses to offer competitive retirement plans while creating new opportunities to attract and retain talented employees.

If you're wondering whether these changes affect your Long Island business, or how to navigate the new rules, this guide breaks down everything you need to know in plain English.

What Is the SECURE Act?

The SECURE Act (Setting Every Community Up for Retirement Enhancement) represents the most significant retirement plan legislation in over a decade. Think of it as a major update to the rules governing workplace retirement plans, designed to help more employees save for retirement while giving employers more flexibility and incentives to offer these benefits.

The law introduced several key changes that directly impact small businesses, making retirement plans more accessible and easier to manage. Rather than creating more red tape, many provisions actually simplify compliance and expand your options as an employer.

How the Key Changes Work

Auto-Enrollment Flexibility: The SECURE Act encourages automatic enrollment in retirement plans, but gives employers control over how it works. When you implement auto-enrollment, eligible employees are automatically signed up to contribute a percentage of their salary unless they actively opt out. You can set the initial contribution rate and schedule automatic increases over time.

For example, you might start new employees at a 3% contribution rate that automatically increases by 1% each year until it reaches 10%. This helps employees build retirement savings without requiring them to make complex decisions on their first day.

Part-Time Employee Eligibility: Previously, many part-time employees couldn't participate in workplace retirement plans. The new rules require employers to allow part-time employees who work at least a certain number of hours annually for consecutive years to participate in the plan. This expands your talent pool by making positions more attractive to workers who prefer flexible schedules.

Small Employer Incentives: The Act increases tax credits for small businesses that start retirement plans, making it more affordable to offer these benefits. There are also credits available for plans that include automatic enrollment features.

Why Small Businesses Are Embracing These Changes

The SECURE Act changes help level the playing field between small businesses and larger corporations when it comes to attracting talent. Professional service firms, medical practices, and other small businesses on Long Island can now offer retirement benefits that compete with what employees might find at bigger companies.

Auto-enrollment particularly benefits employers because it dramatically increases employee participation rates. When employees have to actively sign up for retirement savings, participation often stays below 70%. With auto-enrollment, participation typically jumps above 90%. Higher participation means better employee satisfaction and can improve your plan's cost structure.

The part-time employee provisions help businesses that rely on flexible staffing models. Dental offices with part-time hygienists, accounting firms with seasonal staff, or law firms with contract paralegals can now use retirement benefits as a competitive advantage in recruiting these valuable team members.

What Your Employees Gain

From the employee perspective, these changes remove common barriers to retirement saving. Auto-enrollment eliminates the procrastination problem – instead of meaning to sign up someday, employees start saving immediately and can always opt out if needed.

The automatic escalation feature helps employees increase their savings over time without having to remember to make changes. As they receive raises or get used to living on their take-home pay, their retirement contributions grow automatically.

Part-time employees gain access to the same tax-advantaged savings opportunities as full-time staff, plus any employer matching contributions you choose to offer. This can be particularly valuable for employees who work part-time by choice but want to maintain consistent retirement savings.

Key Implementation Considerations

While the SECURE Act creates opportunities, successful implementation requires careful planning. You'll need to decide on contribution rates, escalation schedules, and how to communicate changes to employees. The law provides flexibility, but that means making decisions about what works best for your specific workforce.

Compliance requirements still exist, particularly around employee notifications and plan administration. You'll also want to coordinate these changes with your existing benefits package to ensure everything works together effectively.

Communication is crucial – employees need to understand how auto-enrollment works, their right to opt out, and how the changes benefit them. Poor communication can lead to confusion and reduced appreciation for the benefits you're providing.

How Benton Oakfield Simplifies SECURE Act Compliance

At Benton Oakfield, we help Long Island businesses navigate these retirement plan changes without getting bogged down in complexity. We work with you to design auto-enrollment features that match your workforce and business goals, handle the compliance requirements, and create employee communication materials that actually make sense.

Our team stays current on all regulatory changes so you don't have to, and we provide ongoing support as your business grows and evolves. We've helped numerous small businesses across Nassau and Suffolk Counties implement these new provisions successfully, and we understand the unique challenges facing professional service firms in our area.

Learn more about our retirement plan services and how we can help you take advantage of SECURE Act opportunities.

Ready to explore how these retirement plan changes could benefit your business? Contact our team to discuss your specific situation and goals.

Compliance Note: Benefit plan rules and tax implications vary based on company size and location. This guide is for educational purposes only. Please contact your Benton Oakfield representative to discuss how this applies to your specific situation.

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