Unlocking Growth: How Federal Tax Credits Help Veteran-Owned Businesses Launch Retirement Plans

For America’s Veteran’s Business Enterprises® (VBEs), building a strong, competitive company isn’t just about winning contracts; it’s about creating a workplace where employees can build a future. Today’s workforce expects meaningful benefits, and retirement plans consistently rank among the most influential tools for attracting and retaining top talent. Yet for many small businesses, especially Veteran-owned firms operating with lean teams and tight margins, launching a retirement plan can feel financially out of reach.

Fortunately, recent federal policy changes have transformed that landscape. Thanks to expanded tax credits under the SECURE Act and SECURE 2.0, Veteran-owned small businesses can now start a retirement plan with little to no net cost, while strengthening their long-term competitiveness. For NaVOBA Certified VBEs, this is more than a tax incentive, it’s a strategic opportunity to grow, scale and stand out in the supplier marketplace.

A Powerful Federal Incentive for Small Businesses

The federal government offers a suite of tax credits designed specifically to help small businesses establish retirement plans such as SEP IRAs, SIMPLE IRAs and 401(k)s. These credits dramatically reduce the cost of launching and administering a plan, making it easier for VBEs to invest in their teams without sacrificing financial stability.

1. Startup Cost Credit: Up to $5,000 per year

Small businesses with 100 or fewer employees can receive up to $5,000 per year for three years to offset the administrative and setup costs of a new retirement plan. This includes:

• Professional fees
• Plan document creation
• Employee education
• Ongoing administrative expenses

For many VBEs, this credit alone covers the majority of upfront costs.

2. Employer Contribution Credit: Up to $1,000 per employee

SECURE 2.0 introduced an additional credit for businesses with 50 or fewer employees. This credit reimburses a portion of employer contributions, up to $1,000 per employee, for the first five years of the plan. It phases down gradually, but for small Veteran-owned firms, it can significantly reduce the cost of matching contributions or profit-sharing.

3. AutoEnrollment Credit: $500 per year

Businesses that add automatic enrollment to their plan receive an additional $500 per year for three years. Autoenrollment increases participation rates and helps employees build long-term financial security.

Combined, these credits can deliver $15,000–$30,000 or more in federal support over several years.

Why This Matters for Veteran-Owned Businesses

Veteran entrepreneurs are known for discipline, resilience and mission-driven leadership. Yet many VBEs operate with small teams and limited administrative bandwidth. Retirement plans often fall into the “someday” category (e.g., important, but not urgent.)

The expanded federal tax credits change that equation.

Strengthening Workforce Competitiveness

Corporate and government buyers increasingly evaluate suppliers on workforce stability and long-term sustainability. Offering a retirement plan signals that a VBE invests in its people, reduces turnover risk and maintains operational continuity, key factors in supplier performance.

Supporting Veteran Employees

Many VBEs employ fellow Veterans who may not have access to employer-sponsored retirement plans after leaving military service. Providing a plan helps bridge that gap and supports financial readiness for the Veteran community.

Enhancing Contracting Positioning

Supplier diversity programs value businesses that demonstrate strong governance and employee support. A retirement plan is a tangible indicator of maturity, stability and readiness for larger contracts.

Reducing Tax Liability

The credits directly reduce federal tax obligations, freeing up capital for growth, equipment, hiring, or training.

A Strategic Opportunity for NaVOBA Certified VBEs

NaVOBA’s mission is to create opportunities for Veteran-owned businesses to thrive. These federal incentives align perfectly with that mission. By educating VBEs about these credits and encouraging adoption of retirement plans, NaVOBA can help its certified firms:

• Strengthen their workforce
• Improve competitiveness in procurement
• Build long-term financial resilience
• Demonstrate best-in-class business practices



This is also an opportunity for NaVOBA to lead the national conversation on Veteran business sustainability. Retirement readiness is part of business readiness, and VBEs deserve access to every tool that supports their growth.

How VBEs Can Get Started

Claiming the credit is straightforward. Businesses simply file IRS Form 8881 with their annual tax return. Most payroll providers and retirement plan administrators can guide VBEs through the setup process and ensure compliance with SECURE 2.0 requirements.

The key is awareness, and that’s where NaVOBA plays a critical role.

Empowering Veteran-Owned Businesses for the Future

Retirement plans aren’t just a benefit, they’re a statement of values. They show employees that their future matters. They show customers that the business is stable and forward-looking. And they show the Veteran community that service continues through leadership, stewardship and opportunity.

With federal tax credits covering most of the cost, now is the ideal moment for NaVOBA Certified VBEs to take advantage of this powerful incentive. By doing so, they strengthen their businesses, support their teams and reinforce the legacy of Veteran entrepreneurship.