CONTACT US
Enter your Name, Email Address and a short message. We'll respond to you as soon as possible.
1021223-00006-00
Paul Sobotta, CLU®, ChFC®, CFP®, RICP®
Financial Planner
CA Insurance Lic. #4169793
Kyle Sobotta, CFP®
Financial Planner
Prudential Advisors
205 Washington Street
Arcadia, WI 54612
Phone: 608-323-7032
Fax: 608-323-7964
Email: paul.sobotta@prudential.com
September/October 2020
SECURE Act of Small Business
When 2020 began, business owners found significant changes in the way they may run their qualified retirement plans, thanks to the Setting Every Community Up for Retirement Enhancement (SECURE) Act. Whether or not you sponsor a plan, here is some of what you may want to know about the new law:
MEPs Expanded
Small employers who previously were ineligible to join multi-employer plans (MEPs) may do so in 2021 if they meet some relaxed requirements. Previously, participation in these multi-employer pools meant your company needed to share some common traits with others in the pool. This is no longer required, opening access to pools that might cost less for small businesses than stand-alone plans. Compliance was also relaxed for MEP providers.New Income Options
The SECURE Act improves the safe harbor provision of plan providers who offer annuities in their qualified plans. The safe harbor makes it easier to satisfy fiduciary requirements when choosing the life insurance company selling the annuity.Employers, however, are now required to file an annual disclosure notifying employees of their projected retirement income, calculated as if the plan balance were invested in an annuity. Additionally, part-time employees, age 21 and older, who worked at least 500 hours each year for three straight years will become eligible to contribute to the company’s qualified retirement plan.
Tax Credits
If your company doesn’t sponsor a qualified plan yet, the new law offers a bigger startup tax credit of up to $5,000 for establishing one, subject to rules and restrictions. You also have until your tax filing deadline, plus extensions, to start a plan. That’s moved from December 31.And if you already sponsor a 401(k), SIMPLE IRA or other qualified plan, you may be eligible to take a $500 credit a year for three years of auto-enrolling new employees. Another new safe harbor involves the automatic enrollment escalation cap, which rises from 10% to 15% of pay—a boon for late savers.
Finally, the SECURE Act reduces some of the red tape and compliance issues that prevented small businesses from adopting qualified retirement plans in the past. So, if you don’t yet offer a retirement plan, you might want to examine one in light of these changes.
1034106-00001-00
Offering financial planning and investment advisory services and programs through Pruco Securities, LLC (Pruco), under the marketing name Prudential Financial Planning Services (PFPS), pursuant to a separate client agreement. Offering insurance and securities products and services as a registered representative of Pruco, and an agent of issuing companies. 1-800-778-2255. Prudential and its representatives do not give tax or legal advice. Please consult with your own advisors regarding your particular situation. Prudential, the Prudential logo, and the Rock Symbol are service marks of Prudential Financial Inc., and its related entities, registered in many jurisdictions worldwide. Prudential Advisors is a brand name of The Prudential Insurance Company of America and its subsidiaries.
This newsletter is general educational information provided by a Prudential Financial Professional and is not intended to market or sell any specific products and services, but rather provide general information about the subject matter covered only.
Prudential Advisors and LTM Marketing Specialists LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Client Marketing, an unrelated third party. Articles are not written or produced by the named representative.
The information and opinions contained in this web site are obtained from sources believed to be reliable, but their accuracy cannot be guaranteed. The publishers assume no responsibility for errors and omissions or for any damages resulting from the use of the published information. This web site is published with the understanding that it does not render legal, accounting, financial, or other professional advice. Whole or partial reproduction of this web site is forbidden without the written permission of the publisher.