Innovative federal legislation known as SECURE 2.0 under consideration on Capitol Hill would boost tax credits for America’s small businesses to set up retirement plans for their workers.
Upgrading the tax credit chips away at America’s retirement savings gap, resulting in $20.5 billion in increased retirement savings over 10 years, according to an analysis of the Joint Committee on Taxation’s revenue estimate.
The timing for this legislation couldn’t be better. America’s small businesses have weathered many challenges in recent years including COVID-19 quarantines, supply chain disruptions and more recently, rapidly rising inflation and interest rates.
In addition, they have been dealing with vexing worker shortages. More than 47 million workers left their jobs last year, and the competition to attract and retain employees is higher than ever.
In today’s competitive labor market, many workers are looking for more long-term financial security from their employer, including from a retirement plan.
Only 52% of private sector workers at firms with less than 50 employees have access to employer-sponsored retirement plans, compared to 91% of employees at companies with 500 or more workers.
SECURE 2.0 legislation would go a long way in leveling the playing field for small businesses and their employees.
In addition to the tax credits, SECURE 2.0 would modernize retirement plan rules, making more part-time workers eligible to join their employer’s retirement savings plan.
In addition, SECURE 2.0 has provisions that will help gig workers and military spouses, many of whom work for small businesses.
America is stronger because of its small businesses. Nearly five-in-10 American workers are employed by small businesses. And small businesses generate nearly half of the nation’s economic activity.
Congress can support this vital engine of America’s economy by passing SECURE 2.0 legislation.
Earlier this year, the U.S. House passed the Securing a Strong Retirement Act by a decisive 414-to-5 margin. And versions of similar bills in the Senate have attracted broad bipartisan support.
There is no time like the present. Congress should work together and pass the SECURE 2.0 legislation without delay.
Susan K. Neely was President and CEO of the American Council of Life Insurers (ACLI), the nation’s leading trade association determined to help families live better lives by achieving financial security and certainty. As president and CEO, Neely drove public policy and advocacy on behalf of ACLI’s member companies that represent 93 percent of industry assets and serve 90 million families. She is CEO Emeritus through December, 2024.
