SECURE Act 2.0 for Small Employers: Vital Payroll & Retirement Changes
The SECURE Act 2.0 modified the rules for how small businesses run their retirement plans. It became law in 2022, but its most important restrictions don’t take effect until 2025 and 2026. Small company owners need to act now to stay in compliance and take advantage of new tax incentives that can help pay for retirement plans.
Good bookkeeping does more than keep track of numbers; it makes sure you follow the rules and helps you make sensible financial choices.
This is a brief guide to what the SECURE Act 2.0 implies for retirement and payroll programs this year.
A Quick Look at the SECURE Act 2.0
The SECURE Act 2.0 is an update to the 2019 law that helps workers save more for retirement and encourages businesses to offer programs. It includes automatic enrollment, increased catch-up payments for older workers, and easier access to retirement plans for part-time workers.
It also adds new tax credits and changes how payroll reports are made. Starting in 2026, small businesses, especially those with fewer than 100 employees, will have to make changes to their payroll, retirement plans, and costs.
1. The 100% Tax Credit: Can You Start a Plan for Free?
The revised Startup Tax Credit is a great help for small businesses with 1 to 50 employees. The SECURE Act 2.0 now pays for all the costs of setting up a retirement plan, up to $5,000 each year for three years.
It can pay for the costs of setting up a 401(k) or SIMPLE IRA, as well as payroll and recordkeeping. Employers can also collect up to $1,000 for each employee who makes a matching contribution, which will be tapered down over five years.
2. Mandatory Automatic Enrollment Rule
Beginning in 2025, businesses that provide new 401(k) or 403(b) plans must automatically sign up employees who are qualified. The default contribution rate has to be between 3% and 10%. The rate has to go up by 1% every year until it reaches 10% to 15%.
Employers who use QuickBooks Software can easily keep track of these changes. Businesses that have been around for less than three years, have 10 or fewer employees, or are part of certain church or government programs are not required to do this.
3. The “Roth Catch-Up” Rule (Starts in 2026)
The IRS will start enforcing the Roth Catch-Up Rule on January 1, 2026. Now is the time for employers to get their payroll systems ready. If an employee made more than $150,000 in the previous year, all catch-up contributions for people age 50 and over must go into a Roth account.
Payroll systems need to keep track of prior wages and switch contributions the right way. Mistakes might lead to tax penalties or problems with the plan.
4. Who Can Work Part-Time
Starting in 2025, the SECURE Act 2.0 makes it easier for long-term, part-time workers to save for retirement. You have to let a worker join your retirement plan if they work 500 hours in two years in a row.
This rule makes it very important to keep track of time correctly. To prevent leaving out eligible employees and having compliance problems, employers must keep track of part-time hours every year.
How remote bookkeeping makes it easier to follow the rules
It can be hard to keep up with the 90 or more rules of the SECURE Act 2.0. That’s why you should work with a remote bookkeeping partner like Impactful Commerce.
- Payroll Integration: We link your QuickBooks to manage auto-enrollment, auto-escalation, and the 2026 Roth catch-up requirements without any problems.
- Tracking Hours: Our team of experienced bookkeepers in Houston keeps track of the hours worked by part-time employees so you can be sure you fulfill the new two-year qualifying standards.
- Tax Credit Documentation: We also keep track of all of your administrative and matching costs so that your CPA may get the full 100% startup tax benefits.
End Note
The SECURE Act 2.0 makes retirement planning a competitive advantage for small businesses in Houston instead of a burden. You can get big tax benefits and build a loyal, safe workforce by using these 2026 upgrades.
Don’t try to figure out these complicated payroll changes on your own. Work with Impactful Commerce LLC to make sure your books are in order and your business stays on track.
