SECURE 2.0: Small, medium businesses have ‘limited understanding’ of new law

Small and mid-size businesses across the United States feel pretty good about their current business operations but are keeping a careful eye on the uncertain macroeconomic environment.

According to a new Nationwide Retirement Institute survey of small and medium-sized business owners, 74% of mid-size businesses and 55% of small business owners rate conditions for their business as good or excellent. Many are even reversing pandemic-related actions. More than 1 in 5 small business owners say they have hired more workers, up 8% from the fall, and only 6% of small businesses have laid off employees, a drop of 4% from the fall, the survey found.

However, only 19% of small business owners and 39% of mid-size business owners rate business conditions in the U.S. economy positively, with many reporting they are increasingly concerned with U.S. economic conditions and two-thirds indicating they expect a recession in the next six months. Of those business owners who expect a recession, 72% believe it will be similar or even worse than the Great Recession of ‘07-’09.

Related: With SECURE 2.0, will more small businesses now offer 401(k)s/? It’s ‘highly likely’

Nearly two-thirds of small business owners and half of mid-size business owners cite inflation and rising prices as the most significant challenge facing their business over the next 6 months, up 6 percentage points for small business owners and 4 points for mid-size business owners since fall 2022. This is followed by rising interest rates at 30% for mid-market-size business owners and 31% for small business owners, up 11 percentage points and down 1 point, respectively, from fall 2022.

Small and mid-size business owners also are challenged by access to capital, employee benefits changes, supply chain disruptions and the tight labor market.

In addition, many business owners have a limited understanding of new provisions outlined in the SECURE 2.0 Act, according to the survey. For instance, only 41% of small business owners and 69% of mid-size business owners are aware of emergency savings opportunities for employees provided by SECURE 2.0. Even fewer business owners know about student loan matching opportunities and employer match tax credits.

“SECURE 2.0 opens the door for more business owners to offer retirement benefits for their employees,” said Juan José Pérez, president of Nationwide Corporate Solutions. “Advisors can help them understand all the different opportunities to offer benefits at a lower cost, which is a great way to ensure they attract and retain top talent.”

Only 35% of small business owners and 59% of mid-size business owners work with a financial advisor, according to the report. Many of those that don’t believe they can handle their business’ finances on their own or think financial advisors are too expensive. In addition, small and mid-size business owners aren’t sure how to find a good advisor.

Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM’s Retirement Advisor magazine and LifeHealthPro online channel.