Between rising financial stress, growing employee expectations, SECURE 2.0 changes, and now the rollout of “Trump Accounts” under the One Big Beautiful Bill Act (OBBBA), many small business owners are asking the same thing:

“Is this something we actually need to care about?”

The answer is: probably yes — but cautiously.

Trump Accounts are being positioned as a new long-term savings vehicle for children, but they may also evolve into a new category of employee benefit. For employers, that creates both opportunity and risk. Like many new government-backed programs, there’s excitement around the concept, but also plenty of unanswered questions around compliance, administration, and practicality.

Here’s what small business employers should know before jumping in.

What Are Trump Accounts?

Trump Accounts are a new tax-advantaged savings account created under the One Big Beautiful Bill Act. They are designed for children under age 18 and aim to encourage long-term investing and wealth building from an early age.

Based on current guidance:

• Eligible children must have a Social Security number
• Annual contributions are currently capped at $5,000 per child
• Parents, grandparents, employers, and certain organizations may be able to contribute
• Contributions grow tax-deferred
• Employer contributions are proposed to be tax-free up to $2,500 per employee’s dependent, under new Treasury guidance.

The federal government is also expected to provide seed funding for some qualifying accounts.

At a high level, think of Trump Accounts as part retirement vehicle, part long-term savings strategy, and part financial wellness initiative.

Why Employers Should Pay Attention

At first glance, Trump Accounts sound more like a personal finance product than an HR strategy.

But that misses the bigger picture.

Employers are under growing pressure to help employees manage financial stress and improve long-term financial wellbeing — especially as healthcare costs, housing costs, childcare expenses, and retirement insecurity continue rising.

For many employees, traditional compensation alone no longer feels sufficient.

That’s why financial wellness benefits are becoming increasingly important in recruiting and retention strategies. Small businesses that cannot always compete with enterprise-level salaries are looking for more creative ways to support employees and differentiate themselves.

Trump Accounts may eventually become part of that conversation.

Especially for employers trying to position themselves as family-friendly, employee-focused workplaces.

What Employers May Be Able to Offer

One of the most interesting parts of the Trump Accounts framework is the possibility of employer contributions for employees’ children. Treasury’s August 2026 proposed rules confirm employers can contribute up to $2,500 annually tax-free, though the rule is not yet final.

That creates a few possible use cases:

• A family-friendly benefit for recruiting and retention.
• A financial wellness perk tied to long-term planning.
• A differentiator for employers that cannot compete on salary alone.

For employers comparing benefit options, this could eventually sit alongside other retirement and financial wellness tools, rather than replace them.

The Rules Are Still Evolving 

This is where employers need to slow down.

Trump Accounts are brand new, and many operational details are still unclear.

Questions remain around:

• Payroll integration (more below)
• Tax reporting obligations
• Administrative responsibilities
• Eligibility verification
• Documentation requirements
• Compliance oversight
• Employee communication
• Fiduciary exposure

Payroll and compliance experts are already warning employers not to move too aggressively until more guidance becomes available.

And honestly, this is where many small businesses get into trouble.

A benefit might sound great in theory… until it creates administrative complexity your internal team cannot realistically support.

Update: Treasury Releases Proposed Rules (August 2026)

On August 11, the Treasury Department and IRS released the first proposed regulations covering employer-sponsored Trump Account programs — answering some of the questions raised above, while confirming others are still unresolved.

Here’s what’s new:

• Two funding paths are now defined. Employers can contribute up to $2,500 per employee’s dependent, tax-free. Separately, employees can now defer their own pretax dollars via payroll into the account.
• A cafeteria plan structure applies. Contributions run through the same pretax mechanism many employers already use for health premiums and dependent care — familiar territory for most payroll systems.
• A safe harbor exists for the $1,000 federal match. Employers who simply match the federal pilot contribution (rather than running a broader program) can skip standard nondiscrimination testing, provided the match is offered equally to every employee with an eligible child.

But the administrative lift is real. Employers will need a written Section 128 plan document, and payroll providers will need to be able to route contributions to whichever trustee an employee’s account sits with — not just one default provider. FICA taxes still apply to these contributions, unlike most other pretax payroll deductions. Nondiscrimination testing questions also remain open, particularly around eligibility in workforces where few employees have qualifying children.

Our take: this is a step forward, not a finish line. The proposed rule is open for comment ahead of an October hearing, so further changes are likely. For most small businesses, the smartest move is still the one outlined above — ask whether employees genuinely want this before building the infrastructure to support it. If your workforce is hourly or lower-income, simply pointing employees toward the $1,000 federal seed money may deliver more value, faster, than setting up a full contribution program.

The Bigger Problem for Small Businesses

Trump Accounts are really part of a much larger trend:

HR and benefits administration are becoming dramatically more complex every year.

Small business owners are now expected to navigate:

• AI and workplace policy
• Pay transparency laws
• Leave law changes
• Rising healthcare costs
• Retirement plan changes
• Employee financial wellness
• Mental health expectations
• Payroll compliance
• Remote and hybrid work policies

And now potentially:
Trump Accounts.

For many businesses, the issue is no longer whether a benefit sounds valuable.

It’s whether the business has the systems, expertise, and HR infrastructure to implement it properly without creating more risk, confusion, or administrative burden.

How Small Businesses Should Approach Trump Accounts

For most employers, the smartest move right now isn’t rushing implementation — it’s strategic evaluation.

Before adding Trump Accounts to your benefits strategy, ask:

• Would employees genuinely value this?
• Does it fit our workforce demographics?
• Can our payroll and HR systems support it?
• Will it simplify our benefits strategy or add complexity?

Because in 2026, benefits are no longer just an HR checkbox. They directly impact recruitment, retention, employee trust, and business stability.

Looking Ahead

Trump Accounts may become a valuable option for some employers, particularly those focused on family-oriented financial wellness benefits. But for now, the smartest approach is to stay informed, monitor guidance, and avoid moving too quickly before the administrative and compliance details become clearer.

If your business is reviewing retirement plans, financial wellness initiatives, payroll systems, or overall HR strategy, now is the time to step back and evaluate whether your current approach is truly built for what employees — and regulations — now demand.

Book a free consultation > 

Clint Parry, MBA, SHRM-SCP is the Business Development Manager at Focus HR. Based in Arizona, Clint works with growing companies to help them turn HR from an administrative burden into a strategic advantage.

The post Trump Accounts Explained: What Small Business Employers Need to Know appeared first on Focus HR Inc..

The good news: it’s fixable, and the fix is mostly documentation. Here’s what buyers are looking for, why lenders care, and how to calculate your own exposure before anyone asks.

How Common Is This, Really?

More common than most owners expect. According to deal-advisory firm Mayfaire Row’s analysis of the International Business Brokers Association’s 2023 buyer survey:

• 58% of lower-middle-market businesses have revenue meaningfully tied to the owner’s personal relationships
• 44% of businesses have the owner acting as the only salesperson — no sales team, no CRM, no pipeline

The same analysis cites Bain & Company research showing that customer relationships dependent on one key person churn 20–35% higher in the first year after an ownership change. That kind of post-close attrition feeds directly into earnout calculations, deal structure, and the buyer’s willingness to pay full price upfront.

This isn’t a niche problem for disorganised businesses. It’s the default state for most companies in the $500K–$5M EBITDA range — which is precisely the range most buyers are shopping in.

What Buyers Check Before Signing a Letter of Intent

Before a buyer signs a Letter of Intent (LOI), they’re typically asking three questions:

Revenue concentration by relationship. Who manages your top 10 customer relationships, and for how long have they personally managed them? Are those clients loyal to the business, or to the person who introduced them?

Referral dependency. Where do new customers actually come from — the owner’s personal network, or a predictable, repeatable sales pipeline? A business that can’t explain its lead sources in writing is a business that looks fragile on paper.

Operational knowledge. Is there one person who is the only one who knows how a critical process works? Operational dependency is usually the hardest issue to fix quickly. A sales relationship can be rebuilt over time. Institutional knowledge that lives exclusively in one person’s head cannot be replaced without writing it down first.

For a deeper look at how HR structure affects business value and buyer confidence, our team works with business owners on exactly these transition-readiness questions.

Why Lenders Care, Too

If your buyer is using SBA financing, key-person risk isn’t just a soft concern — it appears in the underwriting.

SBA lenders routinely require a seller transition agreement before approving the loan. This is a defined period, often 6–24 months, where the seller stays on in an advisory capacity to make introductions and transfer knowledge. For highly dependent businesses, some lenders won’t close without a minimum transition window of 90–180 days.

Lenders may also require key-man life insurance on the seller during the transition window, ensuring the loan is protected if something happens mid-handover. For context, a $1–$2 million term policy on a healthy 55-year-old typically runs $2,000–$6,000 a year — a modest cost relative to the deal value it protects. Confirm current rates with a broker, as these vary by health history and underwriter.

What Actually Reduces Key-Person Risk

The fix comes down to documentation and delegation work you can start well before you’re anywhere near a buyer conversation.

Map the relationships. Identify who owns each major customer relationship and note how long the owner has personally managed it. If it’s you, that’s the gap. Start making introductions to other team members now, not at the point of sale.

Document the processes. Write down exactly how the business executes the tasks that only one person currently knows how to do. Standard Operating Procedures (SOPs) aren’t bureaucracy — they’re the thing that convinces a buyer the business runs without you.

Build a real transition plan. Saying “I’ll help with customer transitions” doesn’t hold up under due diligence. Saying “I will personally introduce the buyer to each of our top 15 accounts within 90 days” does. Write it down and make it specific.

Cross-train your team. Ensure institutional knowledge lives in more than one head before you need it to. This takes months or years, not weeks.

Create retention incentives. Short-term retention bonuses tied to post-close milestones reduce first-year churn risk and give buyers confidence that your key non-owner employees will stay through the transition.

This is the HR work that determines whether a buyer’s first year goes smoothly — or whether they discover, three months after close, that the business they bought was really a relationship between a customer and you. Our HR consulting team works with business owners on exactly this kind of pre-exit people strategy, from succession planning to retention structures to SOP documentation support.

How Key-Person Risk Affects Your Valuation

The numbers are significant. According to M&A advisory data, significant key-person dependency typically reduces valuation by 0.5–1.5x EBITDA multiple. Businesses that successfully reduce it attract 30% more buyer interest and can command materially higher multiples at close.

Consider the difference:

That $2M–$3M gap is entirely a function of how the business is structured, not how it performs. Performance gets you in the room. Structure determines what you’re offered.

How Exposed Is Your Business?

Wherever you land on the checklist below, the fix starts the same way: write it down before someone has to ask.

If the checklist reveals significant exposure, the best time to start reducing it is now — not when a buyer sends a LOI. Most of the structural work takes 12–24 months to show up convincingly in due diligence.

Book a free consultation with Focus HR to talk through where your business sits and what a pre-exit HR strategy looks like in practice.

Frequently Asked Questions

The post Key-Person Risk: The Quiet Deal Killer appeared first on Focus HR Inc..

That boundary is quickly dissolving.

Today, financial wellness is shifting from a retirement-only benefit to a whole-person financial strategy. Employers are increasingly recognizing that financial stress is a workplace issue, not just a personal one. They are responding by expanding their total rewards beyond retirement savings to include personalized financial wellness support and they are doing it because it directly improves productivity, retention, and organizational resilience.

Financial wellness is no longer a niche perk. It is becoming a core element of workforce strategy.

The Hidden Cost of Financial Stress

The push toward holistic financial wellness isn’t simply about being a more compassionate employer. It’s a direct response to a growing workforce crisis that is materially impacting business performance.

According to PwC’s 2026 Employee Financial Wellness Survey:

• 59% of full-time employees are stressed about their finances
• 44% say inflation has had a major or severe impact on their financial situation
• More than half of workers have less than $5,000 in emergency savings

Recent 2026 workforce research paints an even more urgent picture for employers managing hourly and frontline teams.

According to The State of Financial Wellness in 2026 report from Tapcheck:

• 78% of workers report feeling financially strained between paychecks
• 85% say they have expenses that cannot wait until payday
• 34% say they cannot make ends meet with their current income

The report also found:

• 79% have less than $2,000 in savings
• 50% do not have retirement savings at all
• 49% carry credit card debt
• 65% carry student loan debt

This is the reality many employees are navigating before they even think about retirement planning.

Employees are not just worried about the future. They are worried about this week.

Gas. Groceries. Rent. Childcare. Utilities. Medical bills.

And when employees are financially overwhelmed, the impact follows them into the workplace.

Financial Stress Is Quietly Hurting Business Performance

The business impact of financial stress is substantial:

• One in three employees says money worries hurt productivity
• Financially stressed employees are nearly five times more likely to be distracted at work
• Financially stressed employees are twice as likely to be actively job hunting
• 73% say they are more attracted to employers that care about their financial wellbeing

The 2026 Tapcheck report also found that employees with access to on-demand pay and financial wellness tools showed measurable improvements in retention and engagement:

• 75% said access to on-demand pay encouraged them to pick up extra shifts
• 62% said they were more likely to apply to a company offering financial flexibility benefits
• 34% said they would consider leaving their current employer for one that offered them

In one employer case study, employees using financial wellness/pay access tools showed a 23% retention boost. Another employer saw retention rates nearly 4.8x higher among employees actively using these programs.

When you look at those numbers through the lens of recruiting costs, turnover, absenteeism, and burnout, financial stress becomes more than an employee issue.

It becomes a business risk hiding in plain sight.

Why the Old Benefits Model Is No Longer Enough

The traditional approach to financial wellness — offering a retirement plan and perhaps a budgeting app buried inside a benefits portal — is quickly becoming outdated.

Employees increasingly need help with:

• Emergency savings
• Debt management
• Day-to-day cash flow
• Healthcare expenses
• Financial education
• Housing affordability
• Retirement readiness
• Caregiving costs

SHRM and broader HR industry reporting in 2026 show a major shift toward integrated financial wellness strategies as employers compete for talent and try to stabilize their workforce amid ongoing economic pressure.

Forward-thinking employers are moving beyond standalone benefits and creating more connected, personalized employee support systems that combine:

• Retirement planning
• Financial coaching
• On-demand pay access
• Flexible benefits
• Healthcare cost education
• Employee assistance resources
• Digital self-service tools

The goal is no longer just helping employees retire someday.

It’s helping them stay financially stable enough to perform well today.

The Rise of Personalized Financial Wellness

As Emily Bailey, President of the East Region at OneDigital, recently noted regarding the changing benefits landscape:

“Financial wellness isn’t a budgeting app in the benefits portal. It’s a coordinated, personalized advisory relationship that helps employees make better decisions across their entire financial life — retirement, healthcare costs, housing, caregiving, income protection.”

Employers are responding quickly.

According to CNBC and EBRI, 70% of employers offered some form of financial wellness initiative in 2025, up significantly from previous years.

The employers gaining a competitive advantage are those connecting financial wellness directly into the employee experience — instead of treating it as a disconnected HR add-on.

That includes:

• Personalized financial education
• Early wage access
• Emergency savings tools
• Integrated retirement planning
• Benefit navigation support
• Financial coaching
• Digital employee self-service platforms

What This Means for Small Businesses

Many small business owners assume these kinds of financial wellness strategies are reserved for large corporations with massive HR departments.

That’s no longer true.

Modern HR technology and outsourced HR partnerships now allow small and mid-sized businesses to offer sophisticated financial wellness tools without building everything internally.

Smart employers in 2026 are increasingly integrating financial wellness into their broader HR and workforce strategy through:

• Modern Human Capital Management (HCM) platforms
• Payroll-integrated financial wellness tools
• Flexible pay solutions
• Benefits education
• Employee self-service technology
• Outsourced HR support
• Data-driven workforce planning

The result?

Employees feel more supported, employers reduce turnover pressure, and HR teams spend less time reacting to workforce stress and more time focusing on growth and culture.

If your business is reviewing benefits strategy, payroll systems, employee retention initiatives, or workforce engagement for 2026, now is the time to evaluate whether your current HR and benefits approach truly supports the realities employees are facing today.

Book a free consultation > 

Clint Parry, MBA, SHRM-SCP is the Business Development Manager at Focus HR. Based in Arizona, Clint works with growing companies to help them turn HR from an administrative burden into a strategic advantage.

The post Why a 401(k) is No Longer Enough: The Shift to Holistic Financial Wellness appeared first on Focus HR Inc..

That’s changing as SECURE 2.0 expands tax credits that can help small businesses lower the cost of offering retirement benefits.

For small business employers trying to improve retention, compete for talent, and strengthen employee loyalty, SECURE 2.0 may be one of the biggest opportunities they’re not fully leveraging yet.

Why Retirement Benefits Matter 

The workforce has changed.

Employees increasingly expect retirement benefits, even from smaller employers. According to WTW’s 2022 Global Benefits Attitudes Survey, 60% of employees surveyed cited their employers’ retirement benefits as an important reason they remain with their current employer, compared with 41% in 2010.

At the same time, business owners are facing:

• Rising hiring costs
• Retention pressure
• Wage inflation
• Burnout and turnover
• Growing competition for skilled workers

That creates a difficult balancing act: How do you offer meaningful benefits without blowing up your budget?

SECURE 2.0 was designed to help solve exactly that problem.

What Is SECURE 2.0?

The SECURE 2.0 Act is a major retirement reform law designed to expand access to workplace retirement plans and encourage more businesses to offer them.

One of the biggest changes for employers was the expansion of tax credits for small businesses that establish retirement plans like:

• 401(k)s
• SIMPLE IRAs
• SEP IRAs
• Other qualified retirement plans

The goal is simple: reduce the financial and administrative barriers that previously stopped small employers from offering retirement benefits.

The 3 Biggest SECURE 2.0 Tax Credits Employers Should Know

1. Startup Cost Tax Credit

This is the tax credit most employers should pay attention to.

Eligible employers may claim a startup credit for qualified retirement plan costs. For employers with 50 or fewer employees, the credit is 100% of eligible startup costs, subject to IRS limits. For employers with 51 to 100 employees, the credit is 50% of eligible startup costs, also subject to IRS limits.  

For some employers, these credits can significantly reduce the upfront cost of launching a retirement plan.

2. Employer Contribution Tax Credit

SECURE 2.0 also introduced a separate credit tied to employer contributions.

For eligible small employers, the credit may be up to $1,000 per employee earning $100,000 or less, and it phases down over five years.

For employers worried about affordability, this is a major shift.

3. Automatic Enrollment Credit

Businesses that add automatic enrollment features may also qualify for a $500 per year tax credit for three years.

Automatic enrollment helps increase participation rates while encouraging employees to build retirement savings earlier.

The Hidden Problem Most Employers Don’t Realize

Many business owners assume retirement plans are primarily a finance or payroll decision.

They’re not.

They’re an HR strategy decision.

Because once a retirement plan is implemented, employers also need to manage:

• Payroll integration
• Employee communication
• Enrollment processes
• Compliance requirements
• Contribution administration
• Ongoing plan oversight
• Vendor coordination

That’s where many businesses get stuck.

The tax credits help offset cost — but they don’t remove operational complexity.

The most strategic employers are not simply “adding more benefits.”

They’re building systems that make benefits easier to manage and easier for employees to actually use.

That’s why many growing businesses are increasingly turning to:

• HR outsourcing (HRO)
• PEO partnerships
• Integrated payroll and HR systems
• Automated onboarding and enrollment tools
• Benefits administration platforms
• HR technology optimization

The goal isn’t just compliance.

It’s creating a smoother employee experience while reducing internal administrative burden.

Because the reality is: most small businesses do not have internal HR teams large enough to manage increasingly complex benefits administration manually.

Before You Rush Into a New Plan, Ask These Questions

Before implementing a retirement plan under SECURE 2.0, employers should ask:

• Does this align with our hiring and retention strategy?
• Can our payroll and HR systems support it?
• Who will manage administration and compliance?
• Will employees actually understand and value the benefit?
• Are we choosing the right plan design for our workforce?

SECURE 2.0 has created one of the biggest retirement benefit opportunities small businesses have seen in years.

But the businesses that benefit most won’t simply chase tax credits.

They’ll use this moment to rethink their broader people strategy: how they attract employees, support financial wellness, streamline administration, and build scalable HR systems for growth.

Because retirement benefits are no longer just a compliance checkbox. They’re becoming a competitive advantage.

Book a free consultation > 

Clint Parry, MBA, SHRM-SCP is the Business Development Manager at Focus HR. Based in Arizona, Clint works with growing companies to help them turn HR from an administrative burden into a strategic advantage.

The post SECURE 2.0 Tax Credits: The Retirement Benefit Small Businesses Might Be Overlooking appeared first on Focus HR Inc..

On paper, you might think you’re “covered” because you have a broker for health insurance and a plan provider for your 401(k). In reality? Much of the heavy lifting lands right back in your lap. And the complexity multiplies with every employee, policy, and compliance requirement you take on.

The Hassles of Benefits Administration

Brokers are great at designing plans and negotiating rates, but usually not built for day-to-day maintenance. That burden typically falls to the employer. If you’re the one managing benefits, here’s what that often looks like: 

• Open enrollment headaches – running meetings, chasing paperwork, and fielding questions.
  
• Employee life changes – handling plan changes for marriage, divorce, or birth, etc.
  
• Ongoing questions – “I lost my insurance card,” “How do I file a claim?” “Am I eligible for coverage yet?”
  
• COBRA administration – allows temporary maintenance of employer-provided health insurance after job loss or reduced hours, usually for 18-36 months
  
• Compliance paperwork – 1094 and 1095 generation, Section 125 Plan rules, 5500 preparation.
  
• Billing and reconciliation – auditing invoices across medical, dental, vision, and ancillary plans.

Multiply this across multiple plans and dozens of employees, and suddenly benefits administration becomes a full-time job. As we wrote in When Benefits Go Sideways: The Hidden Risk of Broker-Led Benefits Administration, relying on brokers alone can expose you to costly errors.

The Complexities of 401(k) Plans

401(k) plans add another layer of complexity — and risk. Employers are responsible for:

• Eligibility and contribution tracking
• Nondiscrimination testing
• Loan disbursements and distributions
• Investment reviews
• Payroll integration and remittance
• Compliance notices and Form 5500 filings
  

And here’s the kicker: as a plan sponsor, you may also carry fiduciary liability. Under ERISA, fiduciaries can be held personally liable for mismanagement, putting your personal assets at risk.

Why Outsourcing Beats DIY

The truth is, most small businesses don’t have the expertise or bandwidth to manage benefits and retirement plans effectively. Internal staff may wear many hats, but they’re rarely specialists in this space.

That’s where outsourcing changes the game. At Focus HR, we:

• Provide full benefits administration—from open enrollment meetings to COBRA tracking to invoice audits. (see: A True Employee Benefits Administration Solution)
  
• Serve as both the 3(16) administrative fiduciary and 3(38) investment fiduciary on retirement plans, taking liability off your plate.
  
• Deliver a streamlined employee benefits portal for elections and information.
  
• Field employee questions directly, so you don’t have to play middleman.

Instead of juggling employees, vendors and paperwork, you can simply say: “Call Focus HR.”  We handle the rest.

The Bottom Line

Benefits and retirement plans should be a competitive advantage, not a source of stress. But when managed in-house, they too often create inefficiency, wasted time, and unnecessary risk.

So as year-end approaches and you plan for 2026, ask yourself: Are you spending more time managing benefits and 401(k) compliance than growing your business?

If the answer is yes, it might be time to rethink your approach.

 Request a Free Consultation

The post Overcoming the Hassle of Small Business Benefits & 401(k) Administration appeared first on Focus HR Inc..

The Basics

A 401(k) plan is a retirement savings plan offered by many large and small U.S. employers that has tax advantages for the saver. Employees who sign up for a 401(k) agree to have a percentage of each paycheck paid directly into an investment account. Employers may match part or all of that contribution. The employee gets to choose among a number of investment options, usually mutual funds. 401(k) plans provide a great way for employees and business owners alike to reduce their individual tax burden and sock away money for retirement.   

However, starting a 401(k) Plan or changing recordkeepers (for existing plans) can be a daunting task.  Once you begin scratching the surface, it can feel like learning a new language, but Focus HR and our strategic partners are here to help you sort through the maze of selecting or changing providers.

There are many questions and considerations to ponder prior to making these big decisions, including the following:

• Are there any tax credits to help offset the cost of starting a 401(k)?
• Should I offer a match?
• Will I have enough time to handle the administrative burden?
• Is my company big enough to start a 401(k)?
• How much does this cost?
• Should I consider a 401(k) or other type of plan?
• Does this expose me to additional liability as a business owner?

To get the conversation going, we’ve addressed these FAQs below and are here to assist your business, no matter where you may be on the journey of providing a retirement plan solution for your business.

Tax Credits

For new retirement plans, companies with up to 50 employees can claim up to 100% of the start-up administration costs (max $5,000). And for the employees who make less than $100,000, employers can claim an additional $1,000 per person, in which employers could apply the credit toward a matching contribution (max $50,000).  In short, the government wants to help you get started and you have meaningful tax incentives to move forward.

These tax credits provide many employers the opportunity to start and operate a plan at close to zero net cost after utilizing these tax numerous tax benefits!

Matching Contributions

Most employers choose to offer employees an incentive for participating in the 401(k) Plan by matching some portion of their contributions. This tool encourages long and loyal service for existing employees and helps attract and retain top talent.

Matching contributions are tax deductible for employers. Most employers match between 3% to 6% of employee’s contributions, but that amount varies by industry. Common matching formulas include a dollar for dollar amount up to a given maximum or 50 cents for every dollar an employee contributes.

Focus HR and our team of consultants are here to help you determine the right matching formula that works for your business.

Administrative Considerations

There are several administrative aspects that accompany starting a 401(k) including:

• Processing contributions
• Tracking eligibility
• Handling loans and distributions
• Tax filings (Form 5500)
• Nondiscrimination testing
• Enrollment and education for employees

Normally, this heavy administrative burden falls squarely on the shoulders of the plan sponsor (you as the employer). The good news here is that the Focus HR 401(k) solution solves this problem!  We take on the “heaving lifting” of these administrative duties so you and your team can focus on revenue producing endeavors. Combined with our HR, Payroll and Employee Benefits services, Focus HR provides a truly integrated solution that saves your business money, time and risk.

Is my company big enough?

No company is too small to consider a retirement plan. In fact, smaller companies can garner larger tax benefits for owners and key employees. Even solo entrepreneurs can start a retirement plan and receive significant tax benefits while growing their retirement nest egg.

Our team of experts can help you find the right fit for you and your company.

Cost

The Focus HR retirement plan offers reduced rates for startup and ongoing plan operation. First year costs in many instances can be $3,500 or higher. However, given our size and scale, Focus HR offers a Multiple Employer Plan 401(k), with compelling pricing for employers of all sizes.  Please contact us to learn more.

401(k) vs SIMPLE IRA

Some smaller companies (100 employees or fewer) may consider utilizing a SIMPLE IRA instead of a 401(k). Below are some key differences between the two plan options:

• Mandatory employer contributions for SIMPLE IRA and limited customization.
• Lower contribution limits for SIMPLE IRA Plans.
• Usually, SIMPLE IRA Plans offer lower up-front cost and less administrative duties.
• 401(k) Plans allow for vesting schedules, profit-sharing contributions, and other features that can be customized to fit your business and goals.

Please contact our team to schedule an introduction call to discuss which plan type is right for your business.

Fiduciary and Liability Considerations

Offering a retirement plan to your employees comes with fair degree of liability and fiduciary responsibilities. A fiduciary is someone who acts on behalf of another person and that role comes with the duty to act with care and prudence.

At Focus HR, our administrative and financial partners help alleviate a significant portion of this responsibility and liability from your plate by shifting most of these fiduciary responsibilities away from you and into the hands of skilled and trusted professionals.

At the end of the day, starting a 401k can be a smart move. Better employee morale and increased retirement readiness are just a few of the benefits along with the competitive advantage in our tight labor market.

If you are ready to learn more about how Focus HR can help you enhance your position as a competitive employer in every respect, please contact Focus HR today to begin exploring your best options for starting a new 401(k) plan or simplifying your existing Plan.

About the Authors

Clint Parry

MBA, SHRM-SCP, Business Development Manager

Clint Parry has a passion for business growth and personal development. In his current role as Business Development Manager for Focus HR, he helps small business owners accelerate their growth through HR outsourcing.

Blake Davelaar, CFP®

Financial Advisor, Allworth Financial 

Blake Davelaar, CFP^®, is an Allworth advisor serving the Tucson, Arizona, area and the greater Southwest Region of the United States. A native of Seattle, Blake is a proud graduate of the University of Arizona. A CERTIFIED FINANCIAL PLANNER™, when he’s not working with clients to help them achieve their investment and retirement goals, Blake enjoys spending time with friends biking Mt. Lemmon or playing golf.

The post The Ultimate Small Business Guide to 401(k) Retirement Plans   appeared first on Focus HR Inc..

RMD Changes

Historically, required minimum distributions (RMDs) began when an individual turned 72. Under the SECURE act, the RMD age changes to 73. This change was enacted on January 1, 2023, so the new requirements are officially operative. But in 10 years, the RMD age will climb to 75.

Secondly, the SECURE act removes RMDs for qualified employer Roth 401(k) plans. Prior to the SECURE act, Roth IRAs were not subject to RMDs, unlike Roth 401(k) accounts. Under the new rules, Roth accounts are no longer subject to RMDs.

Changes to Catch-Up Contributions

The SECURE act introduces two major changes to how catch-up contributions are handled.

First, it increases the limits to which you can make catch-up contributions to your retirement plan. If you’re between the ages of 60 and 63, you can contribute either $10,000 or 150% of the catch-up limit of the 2024 calendar year (whichever is greater). This change goes into effect starting in 2025.

Secondly, if your wages for the prior calendar year exceed $145,000, any catch-up contributions you make must be made as Roth contributions. If your salary is less than that, you may still make pre-tax contributions, but the plan cannot limit any account holder from contributing. This change goes into effect in January 2024.

Hardship Withdrawals

As of 2024, 401(k) account holders can take an “emergency” withdrawal from their account in the amount of $1,000 or less. You can take this amount once per year to cover unforeseen expenses. However, you must repay the distribution within a designated time limit. Otherwise, you’ll be prohibited from additional withdrawals for three years.

Historically, early distributions have been subject to a 10% tax, but the SECURE 2.0 Act eliminates this requirement. It also allows penalty-free withdrawals on smaller sums in cases involving domestic abuse.

Student Loan Payments

Student loans often prevent people from saving for retirement. The SECURE 2.0 Act now allows employers to make matching retirement plan contributions based on the employee’s student loan payment amount. This change will go into effect in 2024.

Emergency Savings Accounts (PLESAs)

Starting on January 1, 2024, employers can add pension-linked emergency savings accounts (PLESAs) to a retirement plan. Any contributions made to the PLESA will be treated as a Roth contribution and only made available to employees who receive low levels of compensation. The total amount that can be contributed to a PLESA is $2,500.

Withdrawals are permitted on a monthly basis (or more frequently) and function as Roth distributions. The first four withdrawals each year can be made with no fee.

401(k) Automatic Enrollment Changes

Many employers already feature automatic enrollment, but the SECURE Act will expand this beginning in 2025. The Act requires 401(k) and 403(b) plans to automatically enroll eligible participants unless they specifically opt out.

This feature is designed to maximize retirement plan participation, though employees will still have the option not to enroll if desired.

Employer Incentives

Under the new guidelines, employers can offer their workers a small financial incentive to encourage participation in a workplace retirement plan. For example, employers may offer a small-value gift card to employees who enroll in the workplace plan.

This guideline is currently in effect for retirement plan years after December 2022, so business owners who are seeking to increase participation may consider offering these incentives.

Replacing Saver’s Credit with Saver’s Match

At present, retirement account holders are permitted to take the Saver’s Tax Credit, a non-refundable credit commonly used in matched plans.

However, starting in 2027, the IRS will replace the saver’s credit with a saver’s match. This new provision allows for a matching federal contribution that goes directly to your retirement plan, up to 50% or $2,000 per person.

The match is classified as an elective deferral and recorded on Form 5500. Since the change occurs in 2027, the first time you can receive this benefit will be during the 2028 tax year.

Benefits Administration and More

While retirement plans and overall benefits administration can seem confusing and overwhelming, Focus HR offers a local team of experts to simplify the process and free you of the administrative burden and risk exposure that comes along with 401K and other health benefit options. To request a consultation, contact Focus HR today.

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