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Pension Plan Startup Tax Credit

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Ease retirement plan costs with the help of a federal tax credit.

Tax relief of up to $500/year is available for small organizations that establish new qualified plans. The credit can help defray plan costs (set-up fees, administrative costs, and employee education expenses) for the first three years the plan is in existence, for a total of $1,500 over the span.

How it works

You qualify for the credit if:

  • You had 100 or fewer employees who received at least $5,000 in compensation in the preceding year
  • You have not had a qualified retirement plan for your business in the last three years (other than a simplified employee pension IRA or a SIMPLE IRA plan)
  • You had at least one plan participant who was a non-owner employee and not considered a highly compensated employee under the tax code.
  • You cannot take both a tax deduction and the tax credit for the startup costs.

Pension plan startup tax credit services

Taking advantage of tax credits can be a full-time job. Our tax and benefit professionals have a deep understanding of federal tax and employee benefit laws and can work with you to identify the advantages and benefits of qualified plans, collect supporting information, and submit tax form 8881 to help you realize the credit.