Tax credit

[Bird]

I probably know the answer to this but will ask anyway...employer has a SIMPLE IRA and only owners are contributing in 2020.  If we start a 401(k) in 2021, and we cover NHCEs, do we get the credit?  (NHCEs were eligible in 2020 but none were contributing.)

[Belgarath]

Hmmm - in order to be eligible for the credit, the employer cannot have maintained a plan during the immediately preceding 3-year period, to which contributions were made, or benefits accrued, for "substantially the same employees." If some NHC's will be covered - say it is a safe harbor nonelective plan for example - I'd be inclined to say the credit is available. Up to the accountant, of course...