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How will the SECURE Act affect small business owners?

DEC. 27, 2019

This week, Congress passed the Setting Every Community Up for Retirement Enhancement (SECURE) Act – one of the largest overhauls of the U.S. retirement system in decades. After spending several months in limbo, its provisions were included in Congress’ appropriations package and approved with the passage of a continuing resolution to fund the federal government. As one of the largest insurance and financial service providers in the United States, Nationwide applauds this bipartisan legislation as it is a significant step forward for our retirement system and was more than a decade in the making.

The SECURE Act will make it easier for business owners to offer retirement plans

Emphasizing the importance of this legislation, according to Nationwide’s recent business owner survey1, 80% of small business owners believe the SECURE Act will allow them to offer a 401(k) plan that rivals those offered at large corporations. Among those who are familiar with the SECURE Act, 84% believe the legislation should make it easier for small business owners to offer a 401(k). In addition, nearly nine in ten agree that the legislation provides both their business and employees tax advantages (88%), helps attract and recruit top talent (88%) and helps improve employee retention (86%).

The American workforce has changed drastically over the past decade – small businesses now account for over 99% of businesses2 in the U.S. and small business employees make up over 40% of the American workforce3. Just as the workforce has changed, so have the financial needs of Americans and the way that they prepare for retirement. For many Americans, the workplace is one of the main places where they seek out retirement savings tools and having access to a workplace retirement plan is a top gauge of retirement preparedness.

Small business owners wear many hats, and decisions on their employees’ benefits such as health care plans and retirement planning tools are often left solely to them. Offering these benefits may feel too complicated or inaccessible – as such, many business owners do not provide them to their employees. With almost half of the American workforce employed by small businesses, a large portion of the population’s financial futures are left compromised. Provisions of this legislation remedy these concerns by providing small business owners a financial incentive to offer their employees a plan, thereby increasing American workers’ access to workplace retirement plans.

The SECURE Act will offer employers open MEPs

With record low unemployment rates making it harder for small businesses to retain top talent, paired with America’s growing retirement preparedness challenge, the SECURE Act provides a solution that will make workplace retirement plans easier to offer: Open Multiple Employer Plans (MEPs). These MEPs allow small businesses to pool their resources together in order to offer a workplace retirement plan that is not only cost effective, but also easier to administer.

The SECURE ACT will provide employers an annual tax credit

In addition to MEPs, the SECURE Act provides an annual tax credit that covers up to $5,000 of plan costs for the first three years that an employer offers a workplace retirement plan. For the past decade, Nationwide has engaged with lawmakers on additional legislative reforms to ensure private-sector small businesses’ needs are addressed and their employees are supported. As part of these retirement reform discussions, Nationwide helped to develop the open MEPs concept that is a key part of this legislation.

The small business tax credit, a less highly publicized (but equally as important) provision, increases the tax credit available to small businesses that start a new retirement plan for their workers. The SECURE Act increases the credit from $500/year up to $5,000/year for three years, meaning the maximum credit is now $15,000 over three years. This small business tax credit, along with open MEPs, encourage access to workplace retirement plans. However, it is important that both provisions work in tandem to truly improve participation for small business owners and their employees. Small businesses are increasingly expanding their footprint and influence in the U.S. economy. As they continue to grow and gain stake, we cannot forget about the employees who are driving innovation forward in our country.

Nationwide is a strong supporter of enhancements to our retirement system that enable and protect the future for Americans and small businesses by creating new pathways to retirement security. For small business employees who are currently denied access to secure retirements, the SECURE Act will offer them the opportunity to establish successful financial futures. Providing avenues for small businesses to support their employees is of the utmost importance, and this legislation has the potential to solve the looming retirement crisis that so many Americans face today.


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    Nationwide commissioned Edelman Intelligence to conduct a 11-question, online survey between August 22-28, 2019, among a sample of 400 U.S. business owners. Business owners are defined as having between 11-500 employees, being 18 years or older, self-reporting as either a sole or partial owner of their business and offer a 401(k) plan to their employees. The margin of error for this sample was +/- 4.9 percent at the 95 percent confidence level. As a member of CASRO in good standing, Edelman Intelligence conducts all research in accordance with Market Research Standards and Guidelines.