For years, many small business employers assumed offering a 401(k) or retirement plan was simply too expensive, too complicated, or too administrative to manage.
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.
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.
