Small Incentives for Employees to Participate in 401(k)s

If you have a 401(k) or SIMPLE-IRA and want employees to participate by making elective salary deferrals, you are permitted as a result of the Consolidated Appropriations Act, 2023, to offer small incentives. Incentives may be small gift cards (what is “small” remains to be seen), but they can’t be purchased with plan assets; you must pay for them from business funds. Previously, such incentives were prohibited. #IdeaoftheDay