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Federal §45E retirement credit

Your state made you offer a retirement plan. The IRS will help pay for it.

Join the state program and you get nothing back. Start your own plan and three federal credits cut your tax bill for up to five years.

Get my free numberEstimate my credit
  • 100 or fewer employees
  • No plan in the last 3 years
  • Flat fee. Never a percentage.
THE RULE01 / 04

15 states now require employers to offer a plan.

Your number

Move the sliders. See what you keep.

This is a quick estimate. The free check runs your real payroll figures against Form 8881, and a person replies.

  • 01Plan costs come back: $250 per eligible employee, at least $500, at most $5,000 a year.
  • 02What you put into their accounts comes back, up to $1,000 each.
  • 03Automatic enrollment adds a flat $500.

Estimate your credit

YEAR ONE
Optional
20
18

Highly paid means earning over $160,000 last year, or owning 5% or more of the business. Count everyone else. IRS limit for 2026

$1,000
$3,099
Your tax rate
WHAT YOU KEEP IN YEAR ONE
$16,535
Credits before lost deduction$21,599
Kept over 5 years$55,693
Check my real number, free

Estimate only, not tax advice. Assumes $2,604 a year to run the plan after setup and that the business or its owners owe enough federal income tax to use the credit.

Your five years

Total credits $72,807 · You keep $55,693

$21,599
$21,104
$16,604
$9,000
$4,500
Credits end
$0
Startup costsYour contributionsAuto-enrollment

There is no year six. After that you are an employer with a plan and the normal cost of running it.

Two ways to meet the rule

15 states require a plan. Only one path pays you back.

See every state’s deadline and penalty

STATE AUTO-IRA
$0

back from the federal government

  • Meets your state’s rule
  • No fiduciary duty, no Form 5500
  • Earns no federal credit
WHAT WE HELP YOU DO
YOUR OWN 401(K) OR SIMPLE
Up to 5 yrs

of federal credits that cut the tax you owe

  • Meets the same state rule
  • Three credits that stack
  • You become the plan sponsor (providers can take most of the admin)
What it is worth

Three credits. They stack. Then they stop.

Open to employers with 100 or fewer employees. Most qualify for all three at once.

  • 01 · STARTUP COSTS
    Up to $5,000 /yr

    Pays back 100% of plan costs (50% if you have 51-100 employees). Limit: $250 per eligible employee, never less than $500, never more than $5,000.

    3 YEARS · 26 USC 45E(a), 45E(b)(1)
  • 02 · YOUR CONTRIBUTIONS
    $1,000 /employee

    Back on what you put into their accounts, for staff earning under $110,000 (2026). With 51 to 100 employees, the credit is cut by 2% for each employee over 50. Usually the biggest one.

    5 YEARS, STEPS DOWN · 45E(f)(2) · NOTICE 2025-67
  • 03 · AUTO-ENROLLMENT
    $500 /yr

    A flat credit for enrolling people by default. A one-time setup switch, and it costs no deduction.

    3 YEARS · 26 USC 45T
How it works

Ten questions to a number your CPA can file.

  1. STEP 1Free

    Take the Federal Money Check

    10 questions, about 5 minutes with a payroll summary. A person runs your figures and replies. Not worth it? We say so.

  2. STEP 2$499 flat

    Get your packet

    Four documents built from your answers, every figure cited to the law. Checked by a person before it reaches you.

  3. STEP 3Your CPA

    Your accountant files

    Your CPA or EA reviews and files. We stay out of the return. We never take a percentage.

Your accountant won’t use it? You get the $499 back.

They tell us in writing, you get a full refund. No other conditions. Good until you file for the first credit year.

Start free
What’s in the packet

Four documents. $499. Done.

Two are for your accountant. Two are for you.

  • Form 8881 worksheet

    Your numbers, line by line, plus a 5-year schedule. Every source cited on its own tab.

    FOR YOUR CPA

  • CPA cover memo

    One page: what is enclosed, the numbers, and three points to confirm before filing.

    FOR YOUR CPA

  • Section 127 plan

    A ready-to-sign education plan. Up to $5,250 a year per employee toward tuition or student loans.

    FOR YOU

  • Provider shortlist

    Three flat-fee providers with published prices, plus the state exemption step.

    FOR YOU
The fine print, up front

Four things most pages leave out.

  • It cuts tax. It is not a check.

    Owe no federal income tax this year? The credit carries back one year, then forward.

  • You give up some deduction.

    No double dip on the same dollar. That is why we show what you keep, not just the credit.

  • Cash goes out first.

    You pay the provider and fund accounts now. The credits land on next spring’s return.

  • It ends after year five.

    Anyone implying it runs forever is selling you something.

Straight answers

The questions your accountant will ask.

The full legal reading for each answer is in the packet and the CPA memo.

We already joined our state auto-IRA. Does that disqualify us?
We read it as no. The credit is blocked only by a plan on a closed list of four types: 401(a), 403(a), SEP and SIMPLE. A state auto-IRA is a payroll-deduction IRA, so it is none of them. This is the most important question in the packet, so we put our full reading in front of your CPA in writing.26 USC 45E(c)(2), 45E(d)(2), 4972(d)(1)(A)
Who actually files this?
Your CPA or enrolled agent, after their own review. We are not a return preparer, a fiduciary or a plan seller. The packet says so on the cover.
What does it cost?
The check is free. The packet is $499, flat, paid by the employer. If the CPA or EA who prepares your return tells us in writing they will not use it, you get the $499 back, until you file for the first credit year.
Is the credit refundable?
No. It cuts federal income tax you owe. Unused credit carries back one year, then forward. If your business is a pass-through, it lands on the owners’ tax.26 USC 39(a)(1)
Does taking the credit cost me the deduction?
Yes, on the startup costs and contributions the credit covers. In the example on this page, $21,599 in credits is $16,535 kept at a 24% rate. The $500 auto-enrollment credit is not reduced. Your worksheet runs it at your own rate.26 USC 45E(e)(2)(A) and (B)
How many years does this run?
The startup and auto-enrollment credits run 3 years. The contribution credit runs 5: 100% in years one and two, then 75%, 50% and 25%. Nothing in year six.
What does sponsoring a plan put on us?
More than the state program does. You take on fiduciary duty, a yearly Form 5500 and nondiscrimination testing. Many providers sell 3(16) services that take most of that off you, and the packet says which ones do. For some employers the state program is still the right call, and we will say so.
Do plan providers pay you?
Not today. If that ever changes, we will say so before you see a shortlist.
What if we don’t qualify?
The free check tells you, at no cost. You need 100 or fewer employees who earned at least $5,000, and no 401(a), 403(a), SEP or SIMPLE for the same employees in the last 3 years. We check that second one four ways: forgotten payroll plans, related businesses under common control, a business you took over, and any other arrangement.26 USC 45E(c), 45E(e)(1)

Find out in ten questions.

About 5 minutes. Free. If the credit isn’t worth your time, we’ll tell you.

The retirement credit is the first one we find. Behind it: state training money, OJT contracts and WOTC.

Start the free check

FLAT FEES ONLY. NEVER A PERCENTAGE.

Reimbursa is not a tax return preparer, a plan fiduciary, or a retirement plan provider. Everything in a packet is information assembled from your own answers and from public law, cited to source, for your CPA or EA to review and file. Figures on this page reflect 26 USC 45E, 26 USC 45T, IRS Notice 2025-67 and the instructions to Form 8881 (Rev. December 2025). The worked example is a fictional 20-person company (18 eligible employees, $3,099 setup, $1,000 contributed per employee, automatic enrollment, 24% tax rate). The credits are nonrefundable: they cut the federal income tax you owe rather than paying you money, and the amounts depend on your facts. State count reflects the 15 state auto-IRA programs live as of September 2026.

Written by Jason Meehl, founder of Reimbursa. Last checked against the law and IRS sources above on .

No licensed CPA has independently reviewed our methodology yet. So nobody should file from this packet, or from any packet, that their own CPA or enrolled agent has not reviewed first. That review is the point of the product. It is why you get the $499 back if your accountant will not use it.