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Tom Meaglia, ChFC®, AEP®,

CLU®, CRPC®, MSFS

Chartered Financial Consultant

Investment Advisor Representative

Chartered Retirement Planning Counselor

CA Insurance Lic. #0567507

 

Meaglia Financial Consulting

2105 Foothill Blvd., #B140, La Verne, CA 91750

 

Toll Free: 800-386-3700

Bus:         909-593-6105

Cell:         818-681-8600

Fax:         909-593-6120

 

Email: tom@meagliafinancialconsulting.com

Website: www.meagliafinancialconsulting.com

March/April 2026

Tax Credits for Retirement Plans

Teamwork. Group of young happy multicultural business people working together in modern office, communicating and sharing fresh ideas

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.


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Thomas Meaglia is an Investment Adviser Representative of Coppell Advisory Solutions LLC, dba, Fusion Capital Management, a registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
Insurance and annuity products are not sold through Fusion Capital Management. Fusion does not endorse any annuity or insurance product, nor does it guarantee any insurance or annuity performance. Annuity and life insurance guarantees are subject to the claims-paying ability of the issuing insurance company. If you withdraw money from or surrender your contract within a certain time after investing, the insurance company may assess a surrender charge. Withdrawals may be subject to tax penalties and income taxes. Persons selling annuities and other insurance products receive compensation for these transactions. These commissions are separate and distinct from Fusion's investment advisory fees.
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