Tax Credit

Submitted by ShipsnGiggles on Mon, 2023-12-18 18:38

An employer (currently sponsors a SIMPLE IRA) would like to start a new 401k in 2024. However they would like to take advantage of the new increased start up plan tax credit.

Is the increased plan start-up cost credit available to an employer that already sponsors a SIMPLE?

• Generally, any ER that had 100 or fewer EEs for the preceding year & that did not sponsor a Qualified Plan within last 3 years will qualify. – Is a SIMPLE IRA considered a qualified plan for the purpose of claiming the tax credit?



Submitted by Alan - IRA critic on Tue, 2023-12-19 02:45

Yes, a SIMPLE IRA is an eligible retirement plan listed in Sec 4872(d) per Sec 45E which contains the existing start up cost provisions and is being modified by Sec 102 of Secure 2.0. SInce a SIMPLE IRA is already an eligible plan, the employer is not starting a new eligible plan, just changing plans.

Submitted by Alan - IRA critic on Wed, 2023-12-20 20:51

  • The IRS has just released some detailed guidance on Sec 102. Details regarding the SIMPLE IRA and any start up credits for that plan may affect this question. For example, the # of employees might now have exceeded the 100 allowed for a SIMPLE IRA Plan. See p 7-15 in the link that follows:
  • N-2024-02 (irs.gov)

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