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Plan Sponsor Newsletters
Plan Sponsors need to know what’s happening in the world of retirement plans and they don’t have all day to dedicate to becoming an expert. Full of timely, topical, and informative articles written by industry experts and reviewed by FINRA, the Plan Sponsor Outlook newsletter can help.
Start-Up Plan Tax Credit
Congress understands the effectiveness of 401(k) plans in helping participants reach their retirement savings goals and they created a tax credit for small employers who start 401(k) plans.
Contribution Limits Table
Each year, the IRS announces a number of limits that apply to qualified retirement plans.
Start-Up Plan Tax Credits
Congress understands the effectiveness of 401(k) plans in helping participants reach their retirement savings goals. As such, in 2001 as part of a new law, they created a tax credit of up to $1,500 ($500 per year for three years) for small employers who start 401(k) plans to help defray the costs of starting and administering the plan. With the passing of the SECURE Act in 2019, Congress further increased the potential tax credit to a maximum of $5,000 annually.
To take the credit, contact your tax advisor or obtain Form 8881 , Credit for Small Employer Pension Plan Start-Up Costs, and follow the instructions.
Each year, the IRS announces a number of limits that apply to qualified retirement plans. The table below summarizes some of these limits.
|2022 Limit||2021 Limit|
|401(k) Maximum Deferral (402(g) Limit)||$20,500||$19,500|
|Age 50 “Catch Up” Contribution Limit||$6,500||$6,500|
|415 Limit (annual additions limit)||$61,000||$58,000|
|Highly Compensated Employee Dollar Limit||$135,000||$130,000|
|Key Employee Dollar Limit (top-heavy plans)||$200,000||$185,000|
|Taxable Wage Base||$147,000||$142,800|
|IRA Maximum Contribution||$6,000||$6,000|