Secure Act 2.0 Tax Credits for Small Business - How to Claim These Incentives?

The Secure Act 2.0 does offer some great incentives for small businesses setting up retirement plans. Let me help clarify how this works! To obtain the tax credit, you don't actually "enroll" through your payroll provider. Instead, you first establish a qualifying retirement plan (like a 401(k), SIMPLE IRA, or SEP), then claim the credit when filing your business taxes using Form 8881 "Credit for Small Employer Pension Plan Startup Costs." Regarding your S-Corp structure: the credit appears on your business tax return (Form 1120-S), not directly on your personal K-1. The credit reduces the business's tax liability, which indirectly benefits you as the owner through pass-through taxation. The Secure Act 2.0 credits are specifically for retirement plans, not health insurance. The main benefits include: 1) Startup cost credits covering up to 100% of costs (up to $5,000/year for 3 years), and 2) A new employer contribution credit that can cover up to $1,000 per employee in matching contributions.

I just went through this exact process with my small construction company! We were definitely confused at first too. I ended up using https://taxr.ai to help me understand our specific situation since the rules are so new and honestly kinda confusing. They analyzed our company structure and payroll details and explained exactly how the Secure Act 2.0 credits would apply. The best part was they broke down the credit amounts we'd qualify for over the 3-year period and showed us how to document everything properly to make sure we actually get the full credit. If you're using Gusto, they actually have some retirement options built in that qualify, but you need to make sure you're tracking the setup costs separately since those are what generate part of the credit.

Wow, I just tried taxr.ai after seeing it mentioned here and it was exactly what I needed for sorting out these Secure Act 2.0 credits! My veterinary practice has 12 employees and I've been putting off setting up a retirement plan because I was confused about how the tax benefits would actually work. The system analyzed our business docs and showed me we're eligible for about $15,000 in tax credits over 3 years! That completely changes the math on offering retirement benefits. The breakdown of exactly which forms to file and when was super helpful, especially since my accountant seemed pretty vague about the whole process. If anyone else is struggling with understanding these new retirement plan credits, definitely check it out. Saved me tons of research time!

For anyone having trouble getting clear answers about Secure Act 2.0 credits from their accountant or payroll provider, I found that calling the IRS directly was the only way I could get official guidance. But of course, getting through to them was a nightmare until I discovered https://claimyr.com which got me connected to an actual IRS agent in about 20 minutes instead of spending hours on hold. You can see how it works here: https://youtu.be/_kiP6q8DX5c - basically they wait on hold with the IRS for you and call you when an agent picks up. The agent I spoke with walked me through exactly how the Secure Act credits work for my S-Corp and confirmed that Form 8881 is indeed what we need to claim the startup cost credit. They also explained that while the employer contribution credit doesn't have its own separate form yet, it should be reported alongside the startup credit.

Just wanted to follow up on my skeptical comment above. I actually tried Claimyr yesterday out of desperation after my accountant told me he "needed more time" to research the Secure Act credits my business might qualify for. I'm genuinely shocked at how well it worked. Got connected to an IRS tax law specialist in about 35 minutes (without having to sit on hold myself). The agent confirmed that my LLC with 9 employees would qualify for both the startup cost credit AND the employer contribution credit under Secure Act 2.0, and walked me through how both would be calculated. For anyone else confused about these credits, the agent clarified that the startup credit applies to costs like setting up the plan, educating employees, etc., while the employer contribution credit specifically benefits employer matching contributions. Total game-changer for my business planning.

One important thing about Secure Act 2.0 credits that hasn't been mentioned yet - there are different credit amounts based on your business size. The original post mentioned having 8 employees, which puts you in a good position to maximize benefits. For businesses with 50 or fewer employees, you can get the full startup credit (up to $5k per year for 3 years). But the additional employer contribution credit is even better for the smallest businesses - 100% credit in year 1, 75% in year 2, 50% in year 3 (up to $1k per employee). Make sure whoever does your taxes understands these details. My accountant initially missed the employer contribution portion entirely!

Has anyone used both Guideline and Gusto for the retirement plan setup? I'm trying to figure out if having them integrated makes it easier to claim these Secure Act 2.0 credits or if it's basically the same no matter which provider you use.

I've been following this thread closely as I'm in a similar situation with my small consulting firm (6 employees, also S-Corp structure). Based on everyone's experiences here, it sounds like the key is making sure you have proper documentation of all setup costs and that your payroll provider can generate the right reports for Form 8881. One thing I'd add - if you're already using Gusto, they actually have some built-in retirement plan options that qualify for Secure Act 2.0 credits. You might want to check with them specifically about their 401(k) offerings rather than going with a separate provider. Sometimes having everything integrated makes the reporting cleaner come tax time. Also, since you mentioned being confused about the credits - the IRS actually published some updated guidance in late 2023 (Notice 2023-75) that clarifies a lot of the questions people have been asking in this thread. Worth checking out if you want the official details rather than relying on third-party interpretations.