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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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Tax credit for small business 401(k)

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If in doubt, please send a new question or ask for an update.

Q: How do I qualify for a tax credit for setting up a 401(k) plan?

A: A tax credit of half of the cost of setting up and operating a retirement plan, up to $500 per year, is available to the business for the portion that is attributable to setting up a retirement savings plan. The credit is automatic; you do not need to take any special action but it makes sense to discuss this with the Plan Adviser at the time of set-up in order to maximize your tax savings. Additionally, lower income employees qualify for a separate individual tax credit for participating in the plan.


More resources: small business retirement plans