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Thinking of Starting a Retirement Plan?
Small employers may qualify for a tax credit

Certain small employers are eligible for a tax credit equal to 50 percent of qualified startup costs for establishing a new qualified plan. The maximum amount of the credit for any one year is $500.

For purposes of this credit, a small employer is defined as an employer that employs 100 or fewer employees who received at least $5,000 of compensation from the employer for the preceding year.

Qualified startup costs are any ordinary and necessary expenses which are paid or incurred in connection with the establishment or administration of an employer plan or retirement-related education of employees with respect to the eligible employer plan.

This provision, although not new, was set to expire in 2010. Recent legislation has made this credit permanent.
 

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