The legislation makes it easier for small businesses to offer retirement plans by providing tax credits and reducing administrative burdens.

Congress recently passed the SECURE 2.0 Act, legislation aimed at strengthening retirement savings plans and American financial wellness. The SECURE 2.0 Act has over 90 provisions, and with some taking effect immediately, others will go into effect over the coming years. While the SECURE 2.0 Act does provide several advantages for employees, it also includes several provisions that could have an impact on franchisors and franchisees, including to help attract and retain employees. Here is a look at some of the most impactful provisions of the Secure 2.0 legislation aimed at making it easier for small businesses, including franchisees, to offer retirement plans by providing tax credits and reducing administrative burdens: 

Expanded Credit for Retirement Plan Administrative Costs

SECURE 2.0 increased the three-year start-up tax credit from 50 percent of administrative costs to 100 percent for employers with up to 50 employees. An additional credit of up to $1,000 per employee earning $100,000 or less, for eligible employer contributions may apply to employers with up to 50 employees but phases out from 51 to 100 employees.

Automatic Enrollment

A retirement plan is a benefit that can help franchisees attract and retain employees and to help employees take advantage of the benefit, the SECURE 2.0 Act expanding the automatic enrollment feature in retirement plans. It makes automatic enrollment more widespread by requiring employers with more than 10 employees to offer automatic enrollment.

That being said, employers who started new retirement plans after December 29, 2022 will, beginning in 2025, be required to automatically enroll employees in their retirement plan at a rate of at least three percent, but not more than 10 percent of eligible wages, with the option for employees to opt out. New companies (in business for less than three years) and employers with 10 or fewer workers are excluded from this requirement.

Optional Roth Treatment of Employer Contributions

Effective immediately, employers may amend their plans to permit employees to elect that employer matching and non-elective contributions be made as Roth (after-tax) contributions, as long as they are 100 percent vested when contributed to the plan. Additional guidance is expected. 

Immediate Incentives for Participation

Currently, employers can only provide matching contributions as an incentive to participate in a retirement savings plan. Effective for plan years beginning after 2022, employers may offer modest financial incentives, such as gift cards, which may help increase participation. However, any financial incentives should be of de minimis amounts and cannot be paid with plan assets.

Treatment of Student Loan Payments for Matching Contributions

Beginning in 2024, student loan payments can be treated as retirement contributions for the purpose of qualifying for matching contributions in a workplace retirement account. Employers will be able to make contributions to their company retirement plan on behalf of employees who are paying student loans instead of saving for retirement. Employers may rely on the employee to certify annually as to the amount of their qualifying student loan payments.

Overall, the SECURE 2.0 Act has the potential to benefit franchisors and franchisees by expanding retirement savings opportunities and making it easier for small businesses to offer retirement benefits to their employees. 


ADP, Inc. and its affiliates do not offer investment, tax or legal advice to individuals. Nothing contained in this communication is intended to be, nor should be construed as, particularized advice or a recommendation or suggestion that you take or not take a particular action. Questions about how laws, regulations, guidance, your plan’s provisions or services available to participants may apply to you should be directed to your plan administrator or legal, tax or financial advisor. Only registered representatives of ADP Broker Dealer, Inc. (ADP BD), Member FINRA, or, in the case of certain products, a broker-dealer firm that has executed a marketing agreement with ADP, Inc., may offer and sell ADP retirement products or speak to retirement plan features and/or investment options available in such ADP retirement products.

Chris Magno is Senior Vice President, General Manager, ADP Retirement Services. In this role, Chris is responsible for the strategic direction of the business which provides recordkeeping services for a wide range of retirement plan types to meet the needs of small-, mid-, and enterprise sized companies. Chris has direct oversight for Operations, Client Service, Implementation, Organizational Readiness, Strategy and Marketing – with IT, Finance, and Sales for Retirement Services having strong dotted lines into him.How Franchise Owners Can Benefit From Secure 2.0

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