A New Tax Credit for Contributions to 401(k) Plans

SECURE Act 2.0 added a new credit for contributing to a new pension plan

Photo by Artem Maltsev on Unsplash

SECURE Act 2.0 was passed at the end of 2022, and it added a new tax credit for employers or farmers who have set up a new pension plan (usually a Section 401(k) plan). In order for it to be a new plan, you must have had no type of pension plan for the last three years including a SIMPLE and SEP plans.

The new credit allows the employer to get a tax credit equal to 100% of the amount the employer puts in for each up employee up to $1,000 per employee. This only applies for employees making less than $100,000 which is most farm employees.