The Act establishes two tax credits to encourage retirement savings.
The Small Business Tax Credit for Start Up Expensesis a 3-year tax credit for growing businesses that adopt a qualified defined benefit or defined contribution plan. The credit covers 50% of the first $1000 in administrative and education expenses for the first three plan years, and is available to employers with 100 or fewer employees.
The Tax Credit for Low- and Middle-Income Savers is a temporary tax credit (for up to 5 years) for contributions made by eligible taxpayers to a qualified plan or IRA. The maximum annual contribution eligible for the credit is $2000 (maximum amount based on adjusted gross income). This tax credit is available to joint filers with incomes of $50,000 or less and single filers with income of $25,000 or less.