Explore Our
“Off The Wall” Blog

Unique, straight-forward, unfiltered opinion on topics of concern for individuals with newfound wealth.

Recent Legislative Changes Give Business Owners More Options for Success

Secure Act 2.0 Gives Business Owners More Options

While you were busy running your business and closing out 2022, Congress passed the “Secure Act 2.0” as part of a broader omnibus spending bill.

While much attention has been paid to what it means for individuals saving for and living in retirement, the bill also included many goodies for business owners. From solo entrepreneurs to owners of larger companies with few or many employees, there’s something in there for everyone that could lead to better outcomes when it comes to running your business and building your post-exit future.

Sole Proprietors: Solo 401k Enhancements

Secure Act 2.0 gives sole proprietors more time to carefully consider what kind of retirement plan is right for them without the pressure to establish a plan by the end of a calendar year.

Unlike SEP IRAs, which can be established after the end of the year and funded with contributions for that year up until the individual tax filing deadline plus extensions (think October 2023 for the 2022 tax year), Solo 401ks had to be established by the end of a calendar year in order to make contributions to them for that year. This could require a lot of advanced planning in an uncertain world.

While SEP IRAs and Solo 401ks are very similar, there are some key differences between the two that would lead an entrepreneur to choose one over another, including:

  • Limitations on SEP contributions based on self-employment compensation – the actual amount you can contribute may be less than the ceiling if your earnings are well below $330,000. Solo 401ks may allow higher contributions than a SEP IRA for those with earnings under $115,000.
  • More paperwork and possible fees associated with a Solo 401k, along with IRS filing requirements. SEP IRAs are very simple to set up and administer at virtually no cost.

Starting in 2023, sole proprietors will be able to establish a Solo 401k by the individual tax filing deadline (without extensions), meaning a plan could be established in April 2024 for the 2023 tax year. This gives business owners a few more months to strategize with their accountant to determine which plan is best to establish – there are often many adjustments to the financial statements happening after year-end which may drive some decision points.


Expanded Roth Options Benefit Both Business Owners & Employees

Secure Act 2.0 provides opportunities to contribute to a Roth employer-sponsored retirement account. This benefits everyone when it comes to building a source of tax-free wealth for the future. Business owners trying to attract or retain talent in a tight labor market have also been given a gift in the form of competitive retirement savings options to offer to their employees.

While Roth contributions don’t lower your taxable income when made, they do allow you to build tax-deferred earnings that eventually become tax-free when withdrawn after owning a Roth for at least 5 years and attaining age 59 ½.

It can be difficult to see into the future to know exactly what your tax rate will be in retirement; however, Roth contributions are a great way to manage the risk that changing tax rates and higher-than-expected future income can pose.

The Secure Act 2.0 introduced:

  • Roth SIMPLE & SEP IRAs: SIMPLE & SEP IRAs are favored by many small businesses because they are cost-effective and easy to set up and administer, but they previously only allowed pre-tax contributions. As of 2023, business owners can offer IRA-based Roth retirement plans without having to create a 401k, which can be costly and burdensome to implement for small businesses or when a business owner needs flexibility with financial commitments.
  • Roth Matching Contributions: Beginning in 2024, employers may also start offering Roth matching contributions. These contributions will be included in the employee’s taxable income and will still be tax deductible for employers.
    • Roth matches are yet another benefit that financially savvy employees may be looking for and evaluating when making career decisions.
      However, Roth matching contributions can’t be subject to a vesting schedule – meaning they belong to the employee no matter how long they work for the company.
    • As a business owner, you will need to consider the risk of employees leaving in the early years of employment and keeping their match. If you considered retirement plan matching contributions to be a retention tactic, you may need to (and should) think about other ways to retain talent.

Help Employees Save for Retirement While Knocking Out Student Loan Debt

Speaking of new ways to attract and retain talent, this option is worth considering. Starting in 2024, employers can make “matching” contributions to retirement plans for amounts that an employee paid toward student debt. Student loans can create a substantial financial burden on those who use them to get the education required to launch their careers. When 42.8 million borrowers have federal student loan debt, it’s likely you have some employees who are struggling to balance student loan repayment with their other financial goals. Student loan repayment at the expense of saving for retirement can negatively impact future retirement security and overall employee well-being…which frankly impacts your business.

If you decide to adopt this provision as an employer, you will be helping your employees achieve better financial outcomes by building retirement savings when they may otherwise not have been able to. Saving early and allowing earnings to compound over many years is critical to secure retirements in a world where pensions are no longer the norm.

No Two Businesses Are Alike

The world of tax-deferred retirement plans is complex, and evolving legislation makes it harder to keep tabs on what’s best for your business. While there are many guidelines out there, your business won’t look exactly like another when it comes to employee demographics and circumstances, financials, and your values and priorities as a business owner. If you have analysis paralysis when it comes to making decisions, let us help shovel the path clear. At Monument, our Team will help you understand your options and share our unfiltered opinions based on YOUR big picture and the role your business plays in securing your financial future.

Emily M. photo

Emily M. Harper, CFP®

Vice President & Partner

Emily’s background in the financial industry began after she graduated from the University of Virginia. During a seven-year run in various advisory and leadership roles at a global asset management firm, Emily acquired four industry licenses, a certificate in Financial Planning from UVA, and her CERTIFIED FINANCIAL PLANNER™ designation.

Learn more ...


Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Monument Capital Management, LLC [“MCM”]), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.   

Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from MCM. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. MCM is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice.  

A copy of MCM’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at www.monumentwealthmanagement.com/disclosures.  

Please Note: MCM does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to MCM’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.  

Please Remember: If you are a MCM client, please contact MCM, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.  Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.  

Stay up to date!

Subscribe to our “Off the Wall” Blog for articles and videos on all things wealth management, by all members of our Team. Unlike Facebook, we will never share your data with anyone.