Startup credit
$0 / 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
Your business may qualify for up to $17,500* in credits
*Illustrative total for a small team; actual credits depend on headcount and wages.
$0
Start-up credit over 3 years
(Form 8881)
$0
Auto-enrollment credit
($500 × 3 years)
$0
Per employee — contribution credit
(phases down over 5 years)
Your estimate
See your number in under a minute.
No email required to see the estimate. The figures below come straight from IRS Form 8881.
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
$1,500$500/yr × 3
Employer-contribution creditadditional
up to $20,000/yrup to $70,000 over 5 yrs (phases down)
Estimate only, per IRS Form 8881. Final eligibility — including the $1,000-per-employee contribution credit (wages ≤ $105,000) — is confirmed on your call.
Why start now
The door to a funded plan is open — for a limited window.
These credits were designed to make a first 401(k) genuinely affordable for small and mid-size employers. They run for the plan's first three years, so the sooner you start, the more of the cost the IRS helps absorb.
- 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
$0 / 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 $0 / emp
A credit on employer contributions for employees earning ≤ $105,000, applied at 100% in years 1–2, then phasing down (75% / 50% / 25%) through year 5.
Already past your state's mandate deadline?
A custom 401(k) satisfies state auto-IRA mandates and returns federal credits at the same time. Use the full calculator to see your state's deadline and penalty exposure.
The next step
Let's set up your plan and claim every credit.
Bonnie handles plan design, recordkeeper negotiation, and the Form 8881 / 5500 filings. You sign once.