Tax Credit for New Small Employer Pension Plans

Thinking about adoping a retirement plan for your employees?  Here’s something to consider…

Small employers who adopt a pension plan for employees may be eligible for a tax credit to cover startup costs.

Under Section 45E of the Internal Revenue Code, an employer that adopts a new plan covering at least one non-highly compensated employee (“HCE”) can take up to a $500 credit (50% of first $1,000) for each of the retirement plan’s first three years of operation for startup and administration costs of the plan.

© 2010 Parsonage Vandenack Williams LLC

  For more information, contact info@pvwlaw.com

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Retirement Planning Key Numbers 2009

For 2009, the retirement plan limits are as follows:

Annual Additions $49,000

Elective Deferrals  $16,500

Catch up Contributions  $5,500

Maximum Covered Compensation  $245,000

Social Security Wage Base  $106,800.  If you have a profit sharing plan formula integrated with social security, be sure to review whether the formula still makes sense as the social security wage base increases.

 © 2008 Parsonage Vandenack Williams LLC  

 For more information, contact info@pvwlaw.com