401(k) employer tax credits

401(k) tax credits are intended to help offset the costs associated with offering a 401(k) plan to your employees. They’re also known as the Credit for Small Employer Pension Plan Startup Costs and the Small Employer Auto-Enrollment Credit.

If you offer a Guideline 401(k) through Gusto, Gusto offers to calculate your company’s 401(k) tax credit for free, right from your Gusto admin account.  We’ll guide you through the questions that can determine if you are eligible and fill out the form with your company’s Guideline data. We’ll also provide instructions you can send your tax preparer to include the form in your income tax return filing. 

401(k) tax credits may offset a portion of income tax that you owe for a given tax year. This means instead of a cash refund, you will see a reduction in owed tax. If you will not owe any income tax this year, then the credit can be carried over for up to 20 years to be used against future income taxes.

If you have questions, we recommend consulting your tax preparer to advise based on your business’s specific situation.