Details of Public Law 117-328, section 102 , Modification of Credit for Small Employer Pension Plan Startup Costs

This provision would increase the nonrefundable income tax credit for small employer pension plan startup costs from 50 percent to 100 percent for employers with less than 50 employees. Employers with between 51 and 100 employees would continue to be eligible for the 50 percent credit.

This provision provides an additional nonrefundable employer contribution income tax credit. The credit is increased by an amount equal to the applicable percentage of employer contributions to an eligible employer plan not to exceed $1,000 per employee. For an employer with more than 50 employees, the credit is reduced by a specified formula. The applicable percentage is 100 percent in the first and second taxable year after the plan is established and reduced to 75 percent in the third year, 50 percent in the fourth year, 25 percent in the fifth year, with no credit available in the sixth year.

The credit is not allowed for an employee who receives wages over $100,000. No deduction is allowed for the portion of qualified startup costs paid or incurred for the taxable year equal to the amount of the credit.