SECURE Act - tax credit - Ed Slott and Company, LLC

Submitted by ShipsnGiggles on Mon, 2020-02-24 20:23

Company currently sponsors a SIMPLE plan
Considering “upgrading” to a 401(k) for 2021

Would the company be eligible for the new increased tax credit?

Permalink Submitted by Alan - IRA critic on Tue, 2020-02-25 03:10

They might be able to add auto enrollment to the SIMPLE IRA and get a $500 credit for 3 years, or adopt a 401k plan next year with automatic enrollment.
Among the provisions to encourage employers to become plan sponsors, the SECURE Act will:
- Increase the business tax credit for plan startup costs to make setting up retirement plans more affordable for small businesses. The tax credit will increase from the current cap of $500 to up to $5,000 in certain circumstances.
- Encourage small-business owners to adopt automatic enrollment by providing a further $500 tax credit for three years for plans that add auto-enrollment of new hires.
- Simplify rules and notice requirements related to qualified nonelective contributions in safe harbor 401(k) plans.
- Extend the period of time for companies to adopt new plans beyond the end of the year to the due date for filing the company tax return, giving employers additional time to cover their employees with a profit-sharing contribution.

SECURE Act – tax credit