With the recent changes introduced by the SECURE 2.0 Act, small businesses that offer qualified retirement plans, such as 401(k)s, may now be eligible for several tax credits that can significantly offset the costs associated with launching and maintaining these plans.
To be considered a qualified small business for these credits, your client must have had 100 or fewer employees who earned at least $5,000 in compensation in the prior year. Additionally, the plan must cover at least one non-highly compensated employee (NHCE), and the business must not have sponsored another plan in the three tax years before establishing the current plan, unless the plans do not cover substantially the same employees.