Beyond helping your employees save for their futures, offering a workplace retirement plan can provide meaningful financial advantages for your company as well. Whether you’re a startup, a small business, or an established employer looking to improve benefits, there are incentives to act now.
Why Offer a Retirement Plan?
Retirement plans like 401(k)s, SEP IRAs, and SIMPLE IRAs are powerful tools for attracting and retaining top employees. Employees increasingly look for strong benefits packages, and a retirement plan is often one of the most sought after when negotiating contracts. Beyond employee satisfaction, offering a plan can benefit you as a business owner.
Tax Credit for Startup Costs
The IRS offers a significant incentive to encourage small businesses to establish retirement plans. If your business has 100 or fewer employees, you may be eligible for a startup tax credit of up to $5,000 per year for the first three years. This credit helps offset ordinary and necessary costs of setting up and administering the plan, including educational expenses for employees. It applies to newly established plans, not ongoing or existing plans.
Additional Tax Credit for Employer Contributions
Small employers may also qualify for an additional tax credit on employer contributions made to their employees’ retirement accounts. This applies to defined contribution plans, SEP IRAs, and SIMPLE IRAs. These credits can further reduce the financial impact of launching and maintaining a plan.
However, there is one important limitation: This credit does not apply to contributions made on behalf of employees who earn more than $100,000 for 2024.
A Strategic Investment
Implementing a retirement plan is more than a tax strategy, it’s a long term investment in your business. It promotes employee loyalty, supports financial wellness, and reinforces your reputation as a responsible employer. With the available tax credits, now is an excellent time to explore your options.
Take Action
If you’d like to learn more we can help you determine the best type of plan for your company’s needs and guide you through the setup process to ensure you receive every tax benefit available. Contact us today or schedule an appointment online.
Sources:
Internal Revenue Service. (n.d.). Retirement Plans Startup Costs Tax Credit. U.S. Department of the Treasury. Retrieved July 2, 2025, from https://www.irs.gov/retirement-plans/retirement-plans-startup-costs-tax-credit
Internal Revenue Service. (n.d.). Retirement Plans for Small Entities and Self-Employed. U.S. Department of the Treasury. Retrieved July 2, 2025, from https://www.irs.gov/retirement-plans/retirement-plans-for-small-entities-and-self-employed
