SECURE 2.0 Enhanced Retirement Plan Tax Credits

SECURE 2.0 Enhanced Retirement Plan Tax Credits

Secure 2.0 included several tax credits related to retirement plans. We wanted to let you know about two of those credits.

Small Plan Startup Credit

This credit has been around, but Secure 2.0 expands the credit. For tax years after 2022, the maximum credit amount has been increased from 50% of startup costs to 100%. This credit can be taken for the first three years of the plan and is for the costs associated with establishment or administration of the plan.

The credit is limited to $250 for each non-highly compensated employee covered by the plan with a minimum credit of $500 and a maximum of $5000.

Employer Contribution Credit

This credit is new for plan years starting after 2022 and is available for the first 5 years of the plan. Plans established 2019 or later may be eligible. The credit is for employer contributions made to eligible employees who make less than $100,000 in FICA wages.

The credit is up to $1,000 of the employer contribution per employee and decreases in year 3-5. The credit is also reduced for the number of employees, whether eligible or not, over 50.

To be eligible for both of these credits you must have less than 100 employees receiving compensation of $5,000 or more.

Need Help?

Contact us today if you have questions about these credits or for help determining if you may be eligible for them.

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