The maximum amount of the credit available for taxable years starting on or after January 1, 2020, depends on the number of non-highly compensated employees eligible to participate in the plan.

2. Tax credit for automatic enrollment. Small employers can also receive an additional nonrefundable tax credit of up to $500 for three years if they establish a plan that includes an eligible automatic contribution arrangement, or if they add such an arrangement to an existing plan.

This change reflects the general consensus that automatic enrollment harnesses the power of behavioral economics to improve savings.

3. Pooled employer plans. The SECURE Act also sanctions a new form of multiple employer plan (MEP). The new "pooled employer plans" (PEPs) permit unrelated employers to pool their resources in order to create a single plan for purposes of ERISA.  PEPs are likely to appeal primarily to smaller employers.

The Act supersedes prior DOL guidance that generally prevents unrelated employers from participating in a MEP. It also amends the Tax Code to eliminate the unified plan — or "one bad apple" — rule, so that one employer's qualification failure does not lead to the disqualification of the entire PEP.

More guidance expected

Qualified defined contribution individual account plans, like a 401(k) are candidates for a PEP, but 403(b) and 457(b) plans do not have this option. PEPs are authorized for plan years beginning on or after January 1, 2021, but additional guidance and a model PEP plan document are expected. In the interim, the Act affords limited relief for good faith compliance with the statutory changes.

Greg Ash is a partner at Spencer Fane LLP in the firm's Overland Park, Kansas office. He is chair of the firm's Employee Benefits Practice Group and helps his clients maximize the value and minimize the risks inherent in their benefit plans.