You could qualify for up to $16,500 in tax credits over a three-year period by starting a qualified retirement plan with auto-enrollment.
Take advantage of federal tax credits of up to $16,500 that cover the first three years of your small business 401(k) plan with auto-enrollment1. These credits remove financial barriers and increase confidence and peace of mind for small business owners. Plus, you can qualify for even more tax credits by contributing to your employees' retirement plan!
1. Please refer to Important Information for details
When you offer a 401(k) to your employees, you empower them to build a stable future. It's a practical step that brings both financial security and confidence. And tax credits make the first three years cost-free for you.
Year 1
Year 2
Year 3
Total
Total tax credits up to ⌃
Start-up credit up to
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Start-up credit is $250 per non-highly compensated employee, but no less than $500 in total and not to exceed $5,000 per year. The credit shall not exceed 50% of total cost per year. The start-up credit is available for the first three years of the plan.
Auto-enrollment credit up to
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Annual credit of $500 applies to plans who add an automatic-enrollment provision to the 401(k) plan.
Ubiquity price before credits
Ubiquity price after credits2
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Year 1
Year 2
Year 3
Year 4
Year 5
Total
Available $ Per Eligible Employee as a Government Match Credit
Eligible Employees Receiving Employer Matching
Federal Government Matching Tax Credit to Employer
Out of Pocket Employer Contribition Expense (after tax credits)
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- If you’re willing to put into your plan as employer contributions, the federal government will give you full credit on those contributions1
- After tax credits, the cost for you to get up to into your plan over five years is zero
- These contributions can be profit sharing, match, safe harbor and QNEC contributions
- If employees leaves beforehand, these profit-sharing matching contributions stay in the plan for owner and/or others
1. Please refer to Important Information for details.
2. Start-up tax credit modification: Small employers with 50 or fewer employees may apply 100% of qualified start-up costs toward the tax credit formula (up to $5,000 per year). New tax credit for start-up plans offering employer contributions: A tax credit equal to the applicable percentage of employer contributions, capped at a maximum of $1,000 per employee.
Applicable to small employers with 50 or fewer employees. For employees with 51–100 employees: The credit is phased out by reducing the amount of credit each year 2% for each employee in excess of 50. Applicable Percentage: 1st and 2nd year = 100%, 3rd year = 75%, 4th year = 50%, 5th year = 25%, 6th year = 0%
No contributions may be counted for employees with wages in excess of $100,000 (inflation adjusted). If taking advantage of this tax credit, employer contributions may not also be counted toward “start-up costs” in the start-up tax credit calculation.
