Encouraging some employees to participate in work-based tax-advantaged retirement savings plans can be challenging. That’s why the SECURE 2.0 Act enabled employers to offer de minimis financial incentives (such as gift cards that don’t exceed $250) to workers who contribute to 401(k) or 403(b) plans. The IRS is reminding employers that incentives can’t be paid for with plan assets. And if employers offer financial incentives, the amounts must be considered part of the recipients’ income. This means incentive funds are subject to tax withholding unless a specific exemption exists. To learn more, contact us or see Internal Revenue Bulletin 2024-2: https://bit.ly/4dZOhLG
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