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Small Business Retirement Plan Updates

Small Business Retirement Plan Updates

March 14, 2024

With tax season in full swing, the government and IRS are yet again keeping small business owners on their toes with new updates. First, we will go over the new 2024 contribution limits for retirement plans and then we will look at SECURE 2.0 Act to see what updates Congress has made the past couple of years.

2024 Plan Limits

SIMPLE IRA plan employees can defer up to $16,000 in 2024 plus $3,500 for ages 50+, in addition to your employer match.  401(k) plan deferral limits for employees are $23,000 in 2024 plus $7,500 for ages 50+. For business owners, the employer match can be up to $46,000 in 2024 and is based on W-2 or net income. Self-Employed SEP IRA owners can contribute a max of $69,000 based on 25% of net income.


Below are some highlights to the new act that apply to retirement plans and how small business owners can take advantage of the provisions:

  • Start Up Costs: Employers can now get a tax credit for up to 100% of plan start up costs beginning in 2023, up to $5,000/yr in the first three years, and may even qualify for additional $1,000/employee for matching contributions.
  • SIMPLE and SEP Roth IRAs: Beginning in 2023, both small business plans are now eligible to receive ROTH contributions.
  • Simple IRA Deferral Limit: For employers with less than 25 employees, you can contribute an additional 10% on top of the limits listed above starting in 2024.
  • Switch to safe harbor 401(k) mid-year: Starting in 2024, employers no longer have to wait until the end of the plan year to terminate a SIMPLE IRA plan.

There are many other updates that are rolling out over the next couple years, but please involve your CPA when trying to decide what plan to offer and what new provisions apply to you. At Legacy Finance, we can consult with you on the options you may have and possibly help set up the appropriate plan.