Tax Credits and IRS User Fee Relief - Tax Law Changes - Retirement Education - Determination Letter

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Tax Credits and Elimination of the IRS User Fees for Small Employers

A new tax credit equal to 50 percent of the administrative and retirement education expenses incurred by a small employer (one with 100 or fewer employees) is available for eligible employers with new plans. This credit applies to the first $1,000 in expenses for each of the first three plan years. It is available for expenses paid or incurred in tax years beginning after Dec. 31, 2001 for plans established after that date.

IRS user fees for determination letter requests will be waived for plan sponsors with 100 or fewer employees, but only during the first five plan years. This is effective for determination letter applications submitted after Dec. 31, 2001.

Tax credits and IRS user fee relief may help small business owners who have not yet established tax-favored retirement and savings programs for their employees but wish to do so.

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