| Businesses without a retirement plan could be eligible for up to $500 in tax credits for establishing a new plan. Starting in 2002, Congress with help pay the start up costs for three years.
With the passage of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), Congress is making tax credits up to $500 available to businesses that start a new retirement plan after December 31, 2001.
The credit is equal to 50 percent of the “qualified start-up costs” and can’t exceed $500 per year. Qualified start-up costs could be defined as expenses paid to establish or administer a plan and/or the cost of retirement related educational materials for employees. Also included would be administrative and consulting fees.
The 2001 act applies to businesses with 100 or fewer employees who received at least $5,000 in compensation during the preceding year. The plan must cover at least one non-highly compensated employee.
The employer must not have established or maintained a plan during the three preceding tax years. The tax credits apply to both defined benefit and defined contribution plans. This would include a 401(k), SEP, or Simple IRA. | 
