IRS Posts Form 8881, Used by Employers to Claim Certain Small Plan Credits

The Internal Revenue Service has released an updated Form 8881, Credit for Small Employer Pension Plan Startup Costs, Auto-Enrollment, and Military Spouse Participation. Qualifying small employers that establish a retirement plan can claim a tax credit for start-up expenses, additional credits for employer contributions, and for implementing automatic enrollment by filing this form with their business tax return. 

A study of 2023 tax year credits by Georgetown University's Center for Retirement Initiatives indicates that no more than five percent of eligible firms claimed the credits in 2023, suggesting that awareness is low even after improvements were added under the SECURE Act and SECURE 2.0.