A Special Message from Robin S. Weingast & Associates

Updated: May 21

First, we hope that you and your family are safe and healthy. Like all of you, we are confronting the ever-evolving realities of how Coronavirus (COVID-19) is transforming our lives. We understand that as the economic and public health landscapes shift by the hour, it can bring about feelings of anxiety and uncertainty. The Robin S. Weingast & Associates team is here to help you understand your options.


Did you know that you might be eligible for up to a $5,000 TAX CREDIT for the establishment of a new Retirement Plan, for each year for 3 years? A tax credit is better than the normal tax deduction available for our fees...it's an immediate offset against taxes due!

About the SECURE Act


In late December of 2019, President Trump signed into law a budget bill to fund the government for the remainder of the fiscal year. Included as an addition to the bill was the SECURE Act (Setting Every Community Up for Retirement Enhancement Act of 2019). The intent of the Act is to amend the Internal Revenue Code of 1986 and ERISA to encourage retirement savings. You may be eligible for up to a $5,000 TAX CREDT for the establishment of a new Retirement Plan, for each year up to 3 years. A tax credit is better than the normal tax deduction available for our fees…it’s an immediate offset against taxes due!


Read below to see how/if you qualify…


INCREASED CREDIT LIMIT: Prior to the SECURE Act the tax credit for small employer pension plans was 50% of the qualified startup costs paid or incurred but limited to no more than $500 for the first credit year and each of the 2 taxable years immediately following.


The new limit is 50% of the qualified startup costs paid or incurred, but limited to the greater of –

(a) $500, or

(b) The lesser of –

  • $250 for each employee who is not a Highly Compensated Employee and who is eligible to participate in the plan, or

  • $5,000

Note that while the maximum credit allowed has increased, there is still an overriding limit of 50% of total costs. The new limit applies to taxable years after December 31, 2019.


For example: Assume the business has 23 employees. 5 are Highly Compensated Employees (meaning they own more than 5% of the business and/or they earned more than $125,000 in 2019). Of the remaining 18 non-Highly Compensated Employees, 13 are eligible for the plan. The credit each year would be 50% of startup costs, but no more than $3,250 (13 non-Highly Compensated Employees x $250).


Other provisions related to the rules regarding the tax credit have not been amended.


  • Employers eligible for the credit include those with no more than 100 employees who received at least $5,000 of compensation from the employer for the preceding year. If an eligible employer fails to meet the 100 employee criteria for any subsequent year, there is a 2-year grace period following the last year the employer was eligible (except in the case of failure due to acquisition or similar transaction).

  • An employer who establishes a new plan is NOT eligible for the credit if that employer (or any member of any control group including the employer, or a predecessor of either) maintained another qualified plan (including a Simple or a SEP) for substantially the same employees during the 3-taxable year period immediately preceding the 1st taxable year for which the credit would otherwise be applicable.

  • Qualified startup costs mean ordinary and necessary expenses paid or incurred in connection with the establishment or administration of the plan or retirement related education provided to the employees of the plan.

  • The plan must cover at least 1 non-Highly Compensated Employee (meaning that a sole proprietor is not eligible for the credit).

  • Plans that are eligible for the credit include 401(a) plans, 401(k) plans, SEPs, and SIMPLEs. 403(b) plans and 457(b) plans are NOT eligible for the credit. Note: it is not clear if adopting into a MEP will qualify an employer for the startup credit. Hopefully, there will be additional guidance provided on that question.

  • The first year for the credit can be the first year that the plan is effective, or the taxable year preceding the first year the plan is effective (since there might be billable startup costs for the preceding year for consulting services, etc).

  • All eligible employer plans are treated as one plan.

  • The employer cannot take the credit and a tax deduction for the same startup costs.

This is just one example of how we can help you navigate this difficult time. As you work through the impact of Coronavirus on your daily operations, your employees, your family, and your community, our team of experts is fully operations. We are here to answer any questions, connect you with resources, help you understand what is happening on the federal, state, and local landscape, and to offer any other support you need to address your concerns.


The most important piece of advice we can provide you during this time is to avoid making panic-based decisions. (You can find other advice on dealing with extreme market fluctuations on our blog.) Before you make any decisions, we urge you to be in touch with us so we can explore your options and serve a true partner to you as you adapt to these challenging times.


All the best,

Robin S. Weingast, President & Owner


Please contact us today to let us know how we can help.


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