Employer contribution credit - owners only

[austin3515]

It seems to me that if a business owner has no employees and has less than $100,000 of compensation they would be eligible for the employer contribution credit.

The admin expense credit would not be available because the cap is based on the number of NHCEs and in this example there are zero. But the only restriction on the employer contribution credit is the 100k of comp limit.
 

Thoughts?

[truphao]

I believe "eligible employee" means "non-HCE" only, which would preclude the owner.  Speaking form memory, would need to go back to the law.

[austin3515]

I think it is pretty widely accepted that even owners with less than $100K of comp get the credit.  if you look at the text, the words "NHCE" do not appear anywhere in there (its not very long).  It only says people with more than $100,000 of comp are not eligible.

I'm really talking myself into this...

[RatherBeGolfing]

On 8/29/2024 at 4:36 PM, austin3515 said:

I think it is pretty widely accepted that even owners with less than $100K of comp get the credit.  if you look at the text, the words "NHCE" do not appear anywhere in there (its not very long).  It only says people with more than $100,000 of comp are not eligible.

I'm really talking myself into this...

I agree.  The startup credit references NHCEs, but the contribution credit references "employees making less than $100,000".  As far as I can recall, owner-employees making less than $100,000 are not treated any different. The ACA credit of $500 has no NHCE or income restriction, and is available for all plans including one participant owner only plans.