The SECURE Act Advantage: Affordable 401(k) Plans for Small Businesses

Why You Should Leverage the SECURE Act to Ease the Cost of Starting a 401(k) Plan

As a small business owner, you work hard to create a thriving environment for your team, but how about the health of your financial future? Providing a 401(k) plan is a powerful way to enhance your overall benefits package, helping both you and your employees save for retirement. In fact, a 401(k) plan isn’t just a good idea—it’s a business-savvy decision that comes with significant advantages for your company.

For small medical practices specifically, where relationships and continuity of care are essential, offering a retirement plan can be a game-changer for both the business and its employees.

Attract and Retain Top Talent

In a competitive industry, attracting skilled talent is essential. Employees are increasingly looking for workplaces that offer comprehensive benefits, and a 401(k) retirement plan is one of the most sought-after benefits. For small businesses, including medical offices where strong relationships and continuity of care are crucial, retaining your best employees is key. A well-structured 401(k) can serve as a golden handshake, showing your staff that you are invested in their future and their financial well-being.

Tax Advantages for Your Business

Beyond the clear benefits to employees, 401(k) plans also offer financial advantages for the business itself. Thanks to provisions under the SECURE Act, small businesses may qualify for tax credits to help offset the cost of setting up a new retirement plan. Here are some of the key tax incentives available:

• Startup Tax Credit: Eligible small businesses can receive a credit of up to $5,000 per year for the first three years to cover startup costs. The credit amount is calculated as the greater of:

  • $250 per eligible non-highly compensated employee covered by the plan, or

  • A maximum of $5,000 per year.

  • Eligibility: To qualify, the business must have 100 or fewer employees who received at least $5,000 in compensation in the preceding year, and the plan must be a new retirement plan for the business.

• Automatic Enrollment Credit: An additional $500 annual credit is available for plans that include automatic enrollment features. This credit is available for the first three years of the plan.

  • Eligibility: This credit applies if the 401(k) plan includes an automatic enrollment provision, which helps increase employee participation.

• Tax Deductible Employer Contributions: Employer contributions to the 401(k) are also tax deductible, reducing your overall taxable income. This makes contributing to your employees' retirement not just a good deed but a smart business move.

Setting up a 401(k) is a meaningful way to invest in your staff while also benefiting your bottom line.

Build a Stronger, More Productive Team

A 401(k) can do wonders for employee morale and productivity. When employees are less stressed about their financial future, they’re able to focus better on the task at hand—whether it's providing exceptional service to customers or, in the case of medical practices, exceptional care for patients. By giving your team access to a retirement plan, you’re helping to reduce their financial anxiety, which translates to a more engaged and productive workforce.

It's Easier Than You Think

A common misconception among small business owners is that setting up a 401(k) plan is overly complex or too costly. Today, there are many affordable options tailored specifically to small businesses. Modern 401(k) providers are focused on making the setup and administration process as seamless as possible, even for businesses with just a few employees. Many plans come with user-friendly online tools that make administration straightforward and provide educational resources for your employees.

Take the Next Step

Offering a 401(k) is a win-win for small businesses. It helps your staff secure their future, saves you money on taxes, and positions your business as a competitive and caring workplace. For small medical practices, it’s especially impactful, helping to ensure your team remains focused and dedicated to patient care.

Retirement planning shouldn’t be something that’s out of reach for small businesses. By offering a 401(k) plan, you’re giving your employees a financial foundation to stand on—and that’s a benefit that will truly make your business stand out.

Who We Are

At Colmina, we are dedicated to building a community centered around the well-being of those we care for. Our commitment to fiduciary advice ensures our decision-making is always in the best interest of our clients. No matter the twists and turns of the financial market, our advice will adapt to match so that your plans can stay true to the course. 

Colmina strives to earn and maintain the trust of our clients. We are dedicated to crafting customized plans and personalized portfolios that are tailored to meet your goals.