NAPA Net - Polling Places 011720

Will a (Much) Bigger Start-Up Credit Matter?

Surveys of small business owners have consistently shown cost to be a significant impediment to the adoption of a retirement plan for employees. The SECURE Act includes a massive increase in a tax credit for start-ups – do you think it will matter?

Under SECURE, the amount of the tax credit is now capped at $250 times the number of NHCEs eligible to participate in the plan up to a $5,000 annual maximum (but never less than $500), though, as with prior law, the credit is still limited to 50% of the start-up costs.

Moreover, if the new plan automatically enrolls employees into the plan on a uniform basis (but at no minimum rate), the employer will get an additional annual credit for start-up costs of $500 per year. And all of this is effective Jan. 1, 2020. Yes, effective for new plans beginning now.

Regardless of whether you work with start-up plans or not (but especially if you do), this week we’d like to know what kind of impact you think this huge increase in the tax credit for start-ups will have – and if it might affect your approach to these plans.

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* 1. What impact do you think the massive increase in tax credit will have on new plan start-ups?

It will have a huge impact on new plan start-ups!

it will have some impact.

it probably won't have much impact.

it will encourage more firms/advisors to sell in that market, but may not impact the number of new plans.

it won't have any impact.

who can say?

Any comment(s) on the trend(s) - or lack thereof?

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* 2. Do you currently focus on start-up plans?

yes.

don't focus on those, but do have some in my portfolio.

no.

depends on what you mean by "focus."

Any comments on the trend(s) with this (or lack thereof)?

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* 3. How many start-up plans have you sold in the past year?

None

1-5

5-10

11-15

More than 15

Any comments?

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* 4. Any chance the SECURE Act changes might lead you to reconsider your current focus?

No, I'm already focused on start-up plans.

No, not currently interested, and not enough here to change that.

Yes, SECURE is going to make a big difference in my focus.

Not sure yet, but I'm keeping an open mind.

Yes, I was focused on start-ups, but now I'm rethinking that focus.

Any comment(s) on these trend(s) (or lack thereof)?

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* 5. Realizing that a lot of variables come into play, in your experience, what is the cost (to a plan sponsor) of a start-up plan for 50-75 employees in the first year?

$7,500 - $10,000

$3,000 - $5,000

$1,000 - $3,000

More than $10,000

less than $1,000

$5,000 - $7,500

I've no earthly idea.

Care to explain your response (or assumptions)?

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* 6. What's going to top your list of topics for Q1 meetings with plan sponsors/committees (you can check more than one)?

SECURE Act implications

The markets.

Investment review

Litigation trends

Service metrics

Preparations for RPF

Education plan.

Service contract provisions.

Something else?

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* 7. Other comments about start-up plans, start-up plan tax credits, increases in start-up plan tax credits, trends in start-up plan tax credits, or life in general?

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* 8. What is your role working with retirement plans?

Advisor

Provider

TPA

Plan sponsor

Recordkeeper

Other (please specify)

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* 9. What size plans do you PRIMARILY work with?

Under $10 million in assets

$10-$20 million

$20-$50 million

$50-100 million

$100 million - $250 million

$250 million - $500 million

Above $500 million

Other (please specify)

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* 10. Suggestions for future survey questions?

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* 11. All responses are anonymous and confidential, of course - but if you'd like me to know who you are, or allow for a response - or want to be included in the lottery for a free registration to the 2020 NAPA 401(k) Summit, you can leave your email below...