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Personal Investments • Re: Solo 401k $500 annual tax credit from Secure 2.0? Anyone understand this?

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Just google “IRS Retirement Plans Startup Costs Tax Credit”

Got to love “the google”!!

bill
I've been almost exclusively Bing since 2013 and this is what I got on a Bing Search:

https://www.irs.gov/retirement-plans/re ... tax-credit

Retirement Plans Startup Costs Tax Credit
From the IRS document you linked:

“ You qualify to claim this credit if:

You had 100 or fewer employees who received at least $5,000 in compensation from you for the preceding year;
You had at least one plan participant who was a non-highly compensated employee (NHCE); and
In the three tax years before the first year you’re eligible for the credit, your employees weren’t substantially the same employees who received contributions or accrued benefits in another plan sponsored by you, a member of a controlled group that includes you, or a predecessor of either.”

How can a Solo 401k ever get past the NHCE restriction? And even if you could, how can an existing Solo 401k get past the “employees not substantially the same as in another plan during the last 3 years.”

Edited to add: I see now that the credit is for using “auto-enrollment” not the start-up cost credit.

Statistics: Posted by SuzBanyan — Fri Feb 23, 2024 6:30 pm



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