Tax credit for startup plans

[AS TPA]

In regards to the tax credit for plan startup costs (which just recently increased to $5k) does anyone know how this tax credit works if an employer maxed out this credit on a startup plan, then terminated that plan and started up a new plan a year later? 

Upon establishing that second startup plan would the employer be eligible for that tax credit again on the new plan?

[Bill Presson]

1 hour ago, AS TPA said:

In regards to the tax credit for plan startup costs (which just recently increased to $5k) does anyone know how this tax credit works if an employer maxed out this credit on a startup plan, then terminated that plan and started up a new plan a year later? 

Upon establishing that second startup plan would the employer be eligible for that tax credit again on the new plan?

credit doesn't apply if there was a plan in place during the previous three years.

[AS TPA]

After three years of having the previous plan in place has passed, does that tax credit then become available to that employer again with a new startup plan?

 

[RatherBeGolfing]

18 minutes ago, AS TPA said:

After three years of having the previous plan in place has passed, does that tax credit then become available to that employer again with a new startup plan?

 

Yes.  

§ 45E(c)

Quote

Eligible employer For purposes of this section—

(1)In general

The term “eligible employer” has the meaning given such term by section 408(p)(2)(C)(i).

(2)Requirement for new qualified employer plans

Such term shall not include an employer if, during the 3-taxable year period immediately preceding the 1st taxable year for which the credit under this section is otherwise allowable for a qualified employer plan of the employer, the employer or any member of any controlled group including the employer (or any predecessor of either) established or maintained a qualified employer plan with respect to which contributions were made, or benefits were accrued, for substantially the same employees as are in the qualified employer plan.

 

[AS TPA]

Ok perfect. This is very helpful. Thanks.