SECURE 2.0 Act Tax Credits: How Small Business Employers Get Up to 5,000 for Starting a Retirement Plan

The SECURE 2.0 Act of 2022 is one of the most underutilized pieces of legislation for small business owners in the US. It provides massive tax credits for employers who start new retirement plans — and most business owners have never heard of it.

Here’s the breakdown: if you start a new 401(k), SIMPLE IRA, or SEP IRA in 2024, 2025, or 2026, you could receive up to $15,000 in tax credits over 3 years just for doing it.

The Two Main SECURE 2.0 Credits

Credit 1: Startup Cost Credit

Amount: 50-100% of plan startup costs, up to $5,000/year for 3 years

Who qualifies: Employers with 1-100 employees who are starting a new retirement plan for the first time (or haven’t offered one in the last 3 years)

What it covers: Administration costs, setup fees, employee education costs

Credit 2: Employer Contribution Credit

Amount: $1,000 per non-highly compensated employee per year (phases out over 5 years)

Who qualifies: Employers with 1-50 employees

Example: A 20-person business making $1,000 contributions to each employee’s account = $20,000/year credit in Year 1

Real-World Example: 25-Employee Business

A New Jersey business with 25 employees sets up a SIMPLE IRA in 2025:

• Year 1 startup credit: $5,000
• Year 1 contribution credit (25 employees × $1,000): $25,000
• Year 2 contribution credit (75% rate): $18,750
• Year 3 contribution credit (50% rate): $12,500
• Total 3-year benefit: $61,250 in credits

Plan administration cost over 3 years: ~$9,000
Net benefit: $52,250 ahead

How SECURE 2.0 Credits Interact with State Retirement Mandates

Here’s the key insight: setting up a private retirement plan both earns you SECURE 2.0 credits AND exempts you from state mandate requirements in all 17 states. You solve two problems with one action — and get paid to do it.

States like California (CalSavers), New Jersey (RetireReady NJ), Illinois (IL Secure Choice), and Oregon (OregonSaves) all recognize qualifying private plans as mandate exemptions.

Deadlines and Timing

The SECURE 2.0 credits are available now and there’s no stated expiration date, but:

• Credits apply to plans started in 2023 or later
• The contribution credit phases down after Year 3
• State mandate penalties are accumulating now — waiting costs money

How to Claim the Credits

SECURE 2.0 credits are claimed on IRS Form 8881. Your CPA or financial advisor handles this — but you need to have the plan in place first.

We help employers across all 17 mandate states set up qualifying plans and maximize their SECURE 2.0 credits. Book your free consultation to see exactly how much you qualify for →