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David P. McCabe,
WMCP®, ChFC®, CLU®
Financial Planner
Nathaniel D. High,
CFP®, RICP®
Financial Planner
nathaniel@centuriafinancial.com
Nicholas J. Over, CFP®
Financial Planner
nicholas@centuriafinancial.com
Sara E. Martin
Operations Manager
Molly R. Kelsh
Client Service Specialist
Centuria Financial Group
2333 Baltimore Blvd Suite B
Finksburg, MD 21048
Phone: 443-952-7232
March/April 2026
Tax Credits for Retirement Plans
Small businesses can greatly benefit from tax incentives that encourage the creation of employee retirement plans. Recent updates show that small business owners starting a new retirement plan can claim a tax credit of up to $5,000 annually for the first three years. This credit offsets the costs of setting up and administering these plans, making it easier for small businesses to provide valuable retirement benefits to their employees.
Automatic Enrollment
Businesses that implement automatic enrollment for new hires can qualify for an extra $500 tax credit per year, for up to three years. The One Big Beautiful Bill Act (OBBBA) has enhanced this incentive by increasing the credit to cover up to 100% of plan startup costs, a substantial improvement from the previous 50% limit.For plans with auto-enrollment, the maximum contribution in the first year is set at 10% of an employee's compensation. Employees must have the option to opt out of this automatic enrollment to maintain flexibility and choice. After the first year, safe harbor plans can incrementally increase contributions up to 15% of compensation, with the opt-out option still available. This structure encourages consistent retirement savings while respecting employee choice.
Time
Business owners also have flexibility in timing. You can establish a retirement plan and claim the related tax credit for the previous year as late as the due date of your company's tax return, including extensions. This extended timeline allows businesses to make strategic profitsharing contributions and maximize tax benefits. These credits and flexible options make 2026 an ideal time for small businesses to explore or expand their retirement plan offerings.Plan Compliance
To support new deductions and credits, businesses may face additional documentation rules, including: Enhanced reporting for employee wage types (e.g., tip income, overtime tracking), verification for green or domestic-use incentives, and additional due diligence standards for tax preparers. Additionally, fines and penalties for non-compliance with ERISA requirements have increased annually, ranging from a few hundred dollars to several thousand dollars. Consult your trusted advisors to ensure compliance and maximize these opportunities for your business and employees.843441
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David P. McCabe, Nathaniel D. High, and Nicholas J. Over are Financial Planners with, and offer securities and investment advisory service through LPL Enterprise (LPLE), a Registered Investment Advisor, Member FINRA/SIPC, and an affiliate of LPL Financial.
LPLE and LPL Financial are not affiliated with Centuria Financial Group.
This newsletter is general educational information provided by a Prudential Financial Professional and is not intended to market or sell any specific products and services, but rather provide general information about the subject matter covered only.
Centuria Financial Group and LTM Marketing Solutions, LLC are unrelated companies. This publication was prepared for the publication’s provider by LTM Marketing Solutions, LLC, an unrelated third party. Articles are not written or produced by the named representative.
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