New Plan Tax Credit for Multiple Employer Plan Adopters?

[Terry Power]

The provisions of the Secure Act that were incorporated in the legislation signed last week changed the new plan credit for employers from $500 to a maximum of $5,000 ($250 x number of eligible employees). 

Would the credit also apply for an employer who currently has no plan but becomes an adopting employer of a 413(c) Multiple Employer Plan?

Thanks!

[RatherBeGolfing]

I haven't seen this addressed specifically, but it is a good question.  Are they eligible for the current credit limited to $500?  If so, they should be eligible for the increased credit as well

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SEC. 104. INCREASE IN CREDIT LIMITATION FOR SMALL EMPLOYER
PENSION PLAN STARTUP COSTS.
(a) IN GENERAL.—Paragraph (1) of section 45E(b) of the Internal Revenue Code of 1986 is amended to read as follows:
‘‘(1) for the first credit year and each of the 2 taxable years immediately following the first credit year, the greater of—
‘‘(A) $500, or
‘‘(B) the lesser of—
‘‘(i) $250 for each employee of the eligible employer who is not a highly compensated employee (as defined in section 414(q)) and who is eligible to participate in the eligible employer plan maintained by the eligible employer, or ‘‘(ii) $5,000

45E references  408(p)(2)(C)(i) to define the eligible Employer

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(C)DefinitionsFor purposes of this subsection—

(i)Eligible employer(I)In general

The term “eligible employer” means, with respect to any year, an employer which had no more than 100 employees who received at least $5,000 of compensation from the employer for the preceding year.

(II)2-year grace period

An eligible employer who establishes and maintains a plan under this subsection for 1 or more years and who fails to be an eligible employer for any subsequent year shall be treated as an eligible employer for the 2 years following the last year the employer was an eligible employer. If such failure is due to any acquisition, disposition, or similar transaction involving an eligible employer, the preceding sentence shall not apply.

45E references 4972(d) to define eligible  employer plan

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(d)DefinitionsFor purposes of this section—

(1)Qualified employer plan(A)In generalThe term “qualified employer plan” means—(i)

any plan meeting the requirements of section 401(a) which includes a trust exempt from tax under section 501(a),

(ii)

an annuity plan described in section 403(a),

(iii)

any simplified employee pension (within the meaning of section 408(k)), and

(iv)

any simple retirement account (within the meaning of section 408(p)).