We’ve been getting a lot of questions regarding the new SECURE Act tax credit available for the 2020 plan year and following. Below is a great summary we put together from our reading of the law:

Old rule: Lesser of half or $500 tax credit for first 3 years of operation of plan(s) if have at least one Non-Highly Compensated Employee (NHCE); for example, must have had at least $1,000 plan expenses outside of the plan to take advantage.

New rule: §104 of the SECURE Act increases by up to 11-fold the small employer pension plan startup credit. The following table breaks down the credit based on the number of employees who are not a highly compensated employee (HCE) but still lesser of half of expenses paid (except the EACA credit; eligible for older plans as well):