Startup Tax Savers Credit for small plans - which year?

[TPApril]

401k Safe Harbor Plan is effective 1/1/22.

Plan deposits 2022 Safe Harbor in 2023.

Plan pays fee for 2022 in 2023.

Understanding that the 2022 contribution applies to 2022 taxes, I think the fee paid in 2023 applies to the 2023 taxes, but wasn't sure.

I'm even more confused about which year the Contribution credit for the safe harbor would apply to - 2022 or 2023 taxes?

[Peter Gulia]

About a tax credit regarding startup expenses other than contributions:

I have never interpreted any tax credit about retirement plans. Yet, here’s a general clue to consider:

Does the text of the Internal Revenue Code section that provides the credit refer to expenses the employer “paid or incurred”?

In the Internal Revenue Code, a phrase of that kind might signal alternatives related to whether the taxpayer’s accounting uses “the cash receipts and disbursements method” [§ 446(c)(1)], “an accrual method” [§ 446(c)(2)], or something else, which might include tax accounting conventions the Code provides and combinations of allowed methods [§ 446(c)(3)-(4)].

If the statute’s text doesn’t answer your question, one might favor an interpretation that is logically consistent with the employer’s tax accounting method.

Also, a tax credit might allow a taxpayer some choice about which tax year is the first for a number of years of the credit.