Starting with tax years beginning after December 31, 2022, a small employer can take advantage of significant tax credits under SECURE Act 2.0 (the “Act”) for establishing a new retirement plan. Under the Act, the tax credits are available for plan administrative and contribution costs.
The full tax credit is available to employers with 50 or fewer employees and there is a partial credit available to employers with 51 to 100 employees. There are several additional conditions for eligibility as well.
Broker-dealers and registered representatives (“advisors”) will want to know about these credits in order to educate small businesses and assist them in establishing plans to take advantage of the credits.
The Credit for Plan Start-Up Costs
- Eligible Small Employers
Advisors should educate small employers about the available tax credit for the administrative costs of setting up and operating an eligible employer plan for the first three years in which the plan is maintained. In order to qualify for the credit, the following conditions must be met:
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