Startup credit
$5,000 / yr × 3
$250 per eligible non-highly-compensated employee, capped at $5,000 per year for 3 years — up to $15,000 total (100% of costs for plans with 1–50 employees, 50% for 51–100).
Starting a new plan?
How much could the IRS pay you to start a retirement plan?
If you're launching a 401(k), the government may help cover the startup cost — worth up to $5,000 a year for three years, plus extra credits when you add automatic enrollment or contribute for your team. Answer three quick questions to see what you could qualify for.
Up to $5,000/yr for 3 years$500/yr auto-enrollment$1,000 / employee
Via IRS Form 8881 (SECURE Act 2.0)
SECURE Act 2.0 Big Tax Credits
Startup credit up to $15,000* over 3 years
*Plus $1,500 for auto-enrollment and up to $1,000 per eligible employee a year for employer contributions. The full startup amount needs about 20 eligible non-highly- compensated employees and at least $5,000 a year of qualified startup costs. Actual credits depend on headcount, wages and costs.
$15,000
Start-up credit over 3 years
(Form 8881)
$1,500
Auto-enrollment credit
($500 × 3 years)
$1,000
Per employee — contribution credit
(phases down over 5 years)
Your estimate
Estimate My Tax Credits
Answer three quick questions to see what your business may qualify for.
A few quick questions
We just need to know roughly how big your plan would be.
How many employees does your business have?
Will the plan include automatic enrollment?
Do you expect to make employer contributions?
◆ Estimated startup credit
Form 8881 startup credit · over 3 years
$15,000
$5,000/yr × 3 — plus the additional credits below.
- Auto-enrollment credit$500/yr × 3
- $1,500
- Employer-contribution creditadditionalup to $70,000 over 5 yrs (phases down)
- up to $20,000/yr
Estimate only. You claim the credits on IRS Form 8881 when you file. Final eligibility — including the $1,000-per-employee contribution credit (wages ≤ $110,000 in 2026) — is confirmed on your call.
Why start now
Credits that cover much of a first plan's cost.
These credits were designed to make a first 401(k) genuinely affordable for small and mid-size employers. They apply to the plan's first three years (five years for the employer contribution credit), whenever the plan starts.
- Offsets the real cost of standing up a new plan.
- Stacks with auto-enrollment and contribution credits.
- Also satisfies state auto-IRA mandates where they apply.
How the credits work
Three credits, often stackable.
A new plan can qualify for more than one credit at the same time. Here's the shape of each — every figure verified against IRS Form 8881.
They stack together
$1,000 / employee+
$1,500 auto-enroll+
startup$15,000
A qualifying new plan can layer all three — startup, auto-enrollment, and employer-contribution credits — in the same year.
Auto-enrollment credit
$500 / yr × 3
An extra $500 per year for three years when your plan includes an eligible automatic-enrollment arrangement — a feature that also boosts participation.
Employer-contribution credit
Up to $1,000 per employee
A credit on employer contributions for employees earning ≤ $110,000 (2026), applied at 100% in years 1–2, then phasing down (75% / 50% / 25%) through year 5.
The next step
Let's walk through the credits your business may qualify for.
Book a call and we will walk through your options together.