401K Tax Savings for Small Businesses: Real World Examples - Mission to Grow: A Small Business Guide to Cash, Compliance, and the War for Talent - Episode # 106
Joining the show this week is a retirement processional with over 20 years of experience who helps people save for their futures. Please welcome to the show, Director of Plan Design Consulting at Vestwell, Kevin Gaston.
Kevin joins Host Mike Vannoy to dive into the benefits and effects of Secure Act 2.0. Kevin shares the different types of tax credits available to employers, the way to use vesting periods to your advantage, and why benefits are better for retention than pure salary alone.
Takeaways:
- Secure 2.0 modernizes retirement rules by making it easier for individuals to save by encouraging employers to implement 401k plans and offer matching contributions through tax credits.
- To maximize startup credits under Secure 2.0, ensure your company benefits from the increased credit of 100% of costs for companies with fewer than 50 employees and consider making contributions to employee accounts.
- For qualifying businesses, Secure 2.0 offers a credit for qualifying employer contributions. The first two years are matched at 100% through credits, the 3rd year is 75% match, the 4th is 50%, and the 5th is 25% before expiring.
- The primary concern for small businesses regarding automatic enrollment in a 401k is the potential for employee backlash. To avoid this, small business owners should proactively communicate any changes to payroll.
- To enhance employee satisfaction, shorten vesting periods to one to two years and consider offering end-of-year bonuses for immediate incentives. Streamlining these benefits can make them more appealing and ensure employees value them more highly.
- Employees with student loan debt can benefit from student loan matching, where repayments are counted as retirement plan contributions for matching purposes. This allows individuals to build their retirement savings while still making loan payments.
Quote of the Show:
- “Benefits on a dollar basis buy more goodwill than dollars do.” - Kevin Gaston
Links:
- LinkedIn: https://www.linkedin.com/in/kevingaston/
- Company Website: https://www.vestwell.com/
Ways to Tune In:
- Spotify: https://open.spotify.com/show/2XThTdn7YC1lkAm0PgZUkj
- Apple Podcasts: https://podcasts.apple.com/us/podcast/mission-to-grow-a-small-business-guide-to-cash-compliance-and-the-war-for-talent/id1725890976
- Amazon Music: https://music.amazon.com/podcasts/328dddd0-3c4f-4b07-a0d3-13bdcb418486/mission-to-grow-a-small-business-guide-to-cash-compliance-and-the-war-for-talent?refMarker=null
- Audible: https://www.audible.com/pd/Mission-to-Grow-A-Small-Business-Guide-to-Cash-Compliance-and-the-War-for-Talent-Podcast/B0CS71KQFM?qid=1706208857&sr=1-1&ref_pageloadid=not_applicable&ref=a_search_c3_lProduct_1_1&pf_rd_p=83218cca-c308-412f-bfcf-90198b687a2f&pf_rd_r=A1ME8MBECSVZ6K4D7CNT&pageLoadId=QBtg12mqKsuZPLGY&creativeId=0d6f6720-f41c-457e-a42b-8c8dceb62f2c
- Podchaser: https://www.podchaser.com/podcasts/mission-to-grow-a-small-busine-5591006
Creators and Guests
Host
Mike Vannoy
Mike is a digital-first marketing executive with 25 years dedicated to helping HR companies thrive. As a board member of an AI software company and Chief Marketing Officer at Asure, he's been at the forefront of AI, HR compliance trends, and the changing demographics that shape today's marketplace. Under his leadership at Sales Engine Media, the company predominantly focused on the payroll, HR, and benefits industries, earning multiple spots on the Inc5000 list. Actively involved in multiple small businesses, Mike is a lifelong entrepreneur adept at navigating the changing workforce dynamics. He has held multiple executive roles at industry-leading HR firms, showcasing his expertise and leadership in the sector.
