Prospect New Clients with SECURE 2.0 Tax Credit Calculator
Use the SECURE 2.0 Tax Credit Calculator to prospect small business clients by demonstrating potential tax credits available for sponsoring a retirement plan.
- Identify Eligibility: Use the calculator to determine if a small business qualifies for tax credits based on employee count and compensation.
- Showcase Benefits: Highlight the potential tax credits for startup costs, employer contributions, and automatic enrollment to illustrate the financial advantages of offering a retirement plan.
- Engage Prospects: Use the calculator results to start conversations with small business owners about the benefits of 401(k) plans, positioning yourself as a knowledgeable advisor who can help them maximize their tax savings.
Please note: Businesses with more than 100 employees are generally not eligible for the credits.2
This information was approved for accuracy as of June 2, 2026, but is not updated for subsequent guidance or law.
Employees are those with at least $5,000 in compensation in the preceding calendar year.
This compensation threshold is generally FICA wages and is indexed.
For illustrative purposes, this sample assumes the employer contribution is same for everyone.
| Year 1 | |
|---|---|
|
This feature may be required for new plans beginning as early as January 1, 2025. DB plans enter "No". |
|
|
Small Businesses with up to 50 employees qualify for 100% of the credit. Small Businesses with more than 50 employees qualify for 50% of the credit. Generally, businesses with more than 100 employees are not eligible for the credit. |
|
|
Plan expenses include establishing and administering the plan and educating employees. |
|
|
Lesser of $5,000 or number of NHCEs multiplied by $250 ($500 if only 1 NHCE). |
|
|
Assumed contributions to non-highly compensated employees. |
|
|
Applicable percentage of the employer contribution given to employees with $100,000 (indexed) or less in FICA wages, up to a maximum of $1,000 per employee. |
|
|
$500 for the first three years in which a Small Business with up to 100 employees offers a EACA including a QACA that meets the EACA requirements (but not an ACA that is not an EACA). |
|
This calculator is provided for informational and illustrative purposes only and is intended to support preliminary discussions with prospective clients. It is not intended to provide, and should not be relied upon as legal, tax, or accounting advice.
The availability and amount of any tax credit depend on the employer's specific facts and circumstances, including eligibility requirements, applicable aggregation rules, plan design, and compliance with Internal Revenue Code sections.
Results are based on user-provided assumptions and do not reflect all variables that may affect the calculation of tax credits. Actual results may deffer materially.
Advisors and plan sponsors should consult with qualified legal, tax, or accounting professionals before making decisions. Ascensus does not provide tax, legal, or accounting advice.
This tool is intended for use by financial professionals and should not be distributed to end clients without appropriate context and review.
1Eligible Employer is an employer who had 100 or fewer employees who received at least $5,000 in compensation from the employer for the preceding calendar year. See IRC Secs. 45E(c) and 408(p)(2)(C)(i). Employers must fall within the applicable threshold number of employees during the first year of the credit eligibility period, then remain an eligible employer in later years to receive the credit(s).
2Two-year grace period may apply (IRC 408(p)(2)(C)(i)(II)).
3Plan must have one eligible employee who is not an HCE. (IRC Sec. 45E(d)(1)(B)). Only applies to Start Up and Contributions credits. An HCE is an employee who satisfies the IRC Sec. 414(q) 5% owner test or compensation test. An employee who is not an HCE is an NHCE.
*The tax credits may be reduced or eliminated if the employer or any member of the related group contributed to another qualified plan (401(a), 403(a), SIMPLE, or SEP) during the three-taxable year period immediately preceding the 1st taxable year in which the employer maintained the qualified plan that the tax credit would have applied to (IRC sec 45E(c)(2)).
*The credit is available for three taxable years beginning with the year the plan is established and each of the two taxable years immediately following. An eligible employer may elect to start claiming the credit in the taxable year preceding the taxable year the plan is established (IRC Sec. 45E(b)(1); IRC 45E(d)(3)).
*The portion of start-up costs and employer contributions for which a tax credit is available cannot take a deduction for the same amounts. Consult a tax advisor regarding the interaction of tax credits and deductions.
*Projections are dependent on accuracy of assumptions noted above.
*These credits are claimed in IRS Form 8881.
*Additional credits may be available. Consult a tax advisor for more information.