On December 20th, the IRS provided us with the small (but important) gift of significant guidance on the changes to Simple and SEP IRA plans put into place by the Secure 2.0 Act. For Simple Plans the under 50 limit as well as the catch up limit will both increase by 10%. This means the under 50 limit of $16,000 will increase to $17,600 and the catch up limit will increase from $3500
extra to $3850. However, it is important to keep in mind that this is only an option for businesses with 25 or fewer employees.
For businesses with 26-100 employees, they have the option to elect the extra 10% but ONLY if they provide a 4%, not the usual 3%, matching contribution. For the companies that provide a 2% contribution for all employees, then they must increase their contribution to 3%.
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As always, if you have any quesitons feel free to give us a call here at Capstone and we will be happy to answer any questions you may have.
