Employee Retirement Options, Fed’s Interest Rate Map, and Free SMB AI Training

Hey, everybody, it's Gene Marks, and welcome to this week's edition of the Paychex THRIVE Week in Review. This is where we take a few items of news that impacts your small business in mine, and we talk about them a little bit.

Before we get started, I know that you are super busy and tied up and trying to juggle a lot of balls in the air running a small business. Well, you probably need help on both the payroll and the HR side and if you do Paychex is the best resource for you to consider. Take it from me. If you use Paychex, they can help you with a whole bunch of things on the HR and the payroll side, freeing up your time to do other things that you are better at doing.

So, if you'd like to learn more, if you want to get help with both your payroll and on a lot of your HR needs, reach out to Paychex. to paychex.com/meet Paychex. That's P-A-Y-C-H-E-X dot-com forward slash Meet Paychex. I promise you, you will not be disappointed.

All right, let's get to the news this week. The first bit of news I found very interesting has to do with a new executive order that was signed by President Trump that's creating retirement accounts for workers without 401(k)s. A new initiative aims to, by the way, this from the New York Post, a new initiative aims to expand retirement savings access for millions of American workers who lack employer-sponsored plans. The proposal would establish government-backed retirement amounts designed for individuals without 401(k)s allowing automatic enrollment and payroll deductions to encourage participation.

Supporters argue this could significantly improve long-term financial security, particularly for lower-income and gig workers who are often underserved by traditional retirement systems. Critics, however, raise concerns about administrative complexity and costs and potential government overreach into private savings.

The plan reflects a broader policy push to address retirement readiness gaps in the U.S. where many workers have little or no savings. If implemented, the program could reshape how Americans save for retirement by offering a more universal portable option outside of employer-based plans.

Let me explain to you guys how this is going to work just so you realize this all will go into effect in 2027 when there is going to be a change to the Saver’s Match. If you have employees that are earning under a certain amount of money – it's about $70,000 for joint filers and then below – they can be entitled to a match from the federal government of up to $1,000 for their contributions. Now, even if they're participating in your 401(k) plan, which is always the better option, by the way, they're still entitled to that match. But this new executive order sets it up so that employees that don't participate in your 401(k) plan – maybe they're individuals, they're freelancers, they're gig workers, and they don't have access to a good retirement plan – now, the government will have these plans available for them to put pre-tax earnings away and, depending if they meet the income requirements, the government will contribute every year $1,000 in a matching contribution, matching contribution to their accounts.

So, this benefits a lot of business owners. If you are still just not sure about having a 401(k) plan – and trust me, you should – there's plenty of tax credits out there to get you to have you set it up. But OK, if you're still not sure, at least your employees starting in 2027 will have an option for putting money away and getting it matched into a retirement plan. So, that's a good thing for your employees and may be a little bit of a relief to you if you don't want to go through the expense of the administration of having a 401(k) plan.

But even if you do have a 401(k) plan, please know that the Saver’s Match, which comes into effect in 2027, can be used in your 401(k) plan for your lower-income employees. It's a little bit complex, but it could be a big benefit to you and your company.

So, my advice is this, if you are working with a payroll company like Paychex, or if you have an outside HR consultant or a labor attorney or your accountant, ask them about this new executive order that the president signed this week, establishing these retirement accounts. They're called Trump IRAs. Also, ask them about the Saver’s Match and how you as a business own can take advantage of it for your employees to give them your contributions to their 401(k) plans that you might not even be making. So, it could be a benefit both for you and for your employees, as well. I'll be writing about it too during the year and that will be effective in 2027.

The next bit of news comes from the Federal Reserve. This is from the Wall Street Journal. After months of debating rate cuts, the Fed is now shifting towards mapping out rate hikes. After extended discussions about potential tax cuts, the Federal Reserve officials are now signaling a shift towards possible interest rate increases. Uh-oh.

Stronger than expected economic data, including persistent inflation and resilient job growth, has led policymakers to reconsider earlier expectations of easing monetary policy. Instead, the Fed is focusing on scenarios where rates may need to remain elevated or even rise further to keep inflation under control. This shift underscores ongoing uncertainty about the economic outlook and highlights the Fed's cautious data-driven approach.

For businesses and consumers, the implications include continued borrowing costs remaining high, which could affect investment, hiring and spending decisions. The evolving stance reflects the Fed's priority of ensuring inflation is sustainably reduced before considering any meaningful rate cuts.

So, what does that mean for you and your small business? We are at right now this juncture in the road. We don't really know if interest rates are going to come up or go down in the months or even the year ahead. So, placing a bet is pretty difficult. There are a lot of inflationary pressures right now and different places that I've been researching from Goldman Sachs to other economists are predicting inflation this year could be anywhere from 2.5 to 5 percent. Obviously, a lot of pressures because of the war going on in the Middle East, putting pressure on energy costs, which reverberates around the economy. If inflation goes up and, you know, job employment still stays pretty resilient and the economy continues to grow, then the Fed has every reason to hold off on cutting interest rates and may decide to increase them.

However, if inflation doesn't live up to expectations and if the economy is still kind of puddling along or even if there are some job losses, the Fed might want to ease interest rates. We don't know. Obviously, we have a new Fed chairman coming in. They're pretty split internally at the Federal Reserve as to what to do.

So, what do you do as a business person? You have to make some decisions. And here's my advice to you. If you were thinking of getting financing for a loan and you want to lock it in at a fixed rate, bear in mind that if rates go up, that would be a good decision. If rates go down, that would be a less than good decision. But if rates do fall, I don't think they're going to fall that. In other words, I don't think the risk of you going forward with a financing project – a new building, a new capital equipment – I don't think the interest rate effects are going to have such a big impact on you that it would stop you from making those decisions. And honestly, with the huge tax benefits that are now available for making these kinds of spending and investments, thanks to the Big, Beautiful Bill, I still think it's going to be a good thing to do.

Bottom line is; Sharpen your pencil, sit with your financial advisor before you go into any debt, whatever you're getting the debt for, you want to do a pretty deep analysis to decide whether or not it's going to make sense and consider that inflation interest rates might go up a point in either direction and see what those scenarios if it makes a big enough difference to you and your decision. I don't think it will, But that's where we're at right now with interest rates.

In today's, or this week's AI news, this news is all about training for AI. There are … free training is launching for small businesses nationwide. Let me read you about this. A new nationwide effort is expanding access to artificial intelligence and training for small businesses through free educational programs backed by business and government groups. The U.S. Chamber of Commerce and its foundation have launched AI training courses designed to help small business owners understand and implement AI tools to improve operations, marketing, and decision making.

Complementing this, the U.S. Department of Labor has announced workforce-focused initiatives aimed at equipping employees with AI-related skills, helping businesses adapt to rapid technological change.

Together, these efforts reflect a coordinated push to boost competitiveness and productivity among small firms while preparing workers for evolving job requirements. The programs emphasize practical applications of AI and aim to lower the barriers to adoption, particularly for smaller organizations that lack the resources to invest heavily in emerging technologies.

Boy, this couldn't have come at a better time. My take on this, by the way, if you're a business, you're trying to get your arms around how to use AI in your business. First of all, you probably own a lot of AI anyway if you're using Microsoft Office or Google Workspace. Get training in those. Maybe hire a Microsoft consultant or a Google consultant for a few grand and have them come out and train your employees to use all the things that you're not using in those applications.

But over and beyond that, the Department of Labor, the U.S. Chamber of Commerce: Look into those training programs as well. They're clearly free, very low cost. They might be able to be applied to what you're doing in your business. And let me tell you, your employees are terrified that AI is going to take over their jobs, and you and I both know that's not going to happen anytime soon. We're looking for people. But you do want your employees to be using AI as productively as possible. So, lean into these training programs. It's the Department of Labor and AI, as well as the U.S. Chamber of Commerce has this new AI program, as well. We'll try and put this into the show notes, as well, so that you've got a good link to go to and find out more information.

Well, that was this week's news for this week, and a lot of news for all of us running businesses. My name is Gene Marks.

A couple of things; Subscribe to our Paychex THRIVE channel on YouTube, please, so you can continue to get more news and information to help you run your business. If you need any help with HR or payroll, go to paychex.com/meetpaychex.

And finally, if you want some advice and tips and help in running your business, sign up for our Paychex THRIVE newsletter. Go to paychex.com/thrive.

So, thanks for listening or watching. Glad you made it this week. We'll be back next week with some more news that impacts your small business and mine and a few thoughts on it. We'll see you then.

Do you have a topic or a guest that you would like to hear on THRIVE? Please let us know. Visit payx.me/thrivetopics and send us your ideas or matters of interest. Also, if your business is looking to simplify your HR payroll benefits or insurance services, see how Paychex can help. Visit the resource hub at paychex.com/worx. That's W-O-R-X. Paychex can help manage those complexities while you focus on all the ways you want your business to thrive.

I'm your host, Gene Marks, and thanks for joining us.

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