Can I Claim a Tax Credit for Starting a Retirement Plan?

Yes — small businesses with 100 or fewer employees that start a new qualified retirement plan (like a 401(k) or SIMPLE IRA) can claim the Small Business Retirement Plan Startup Credit of up to $5,000 per year for three years. The SECURE 2.0 Act (2022) also created an employer contribution credit that can cover up to $1,000 per employee for matching contributions in the first few years. To qualify, you must have had at least one employee who isn't a highly compensated employee. This is one of the most underused tax incentives for small business owners. Talk to a plan administrator or CPA to set one up and claim the full credit.