Internal Revenue Code:Sec. 45E. Small employer pension plan startup costs

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Location in Internal Revenue Code

     TITLE 26 - INTERNAL REVENUE CODE
      Subtitle A - Income Taxes
       CHAPTER 1 - NORMAL TAXES AND SURTAXES
        Subchapter A - Determination of Tax Liability
         PART IV - CREDITS AGAINST TAX
          Subpart D - Business Related Credits
        

Statute

    Sec. 45E. Small employer pension plan startup costs
 
    (a) General rule
      For purposes of section 38, in the case of an eligible employer,
    the small employer pension plan startup cost credit determined
    under this section for any taxable year is an amount equal to 50
    percent of the qualified startup costs paid or incurred by the
    taxpayer during the taxable year.
    (b) Dollar limitation
      The amount of the credit determined under this section for any
    taxable year shall not exceed -
        (1) $500 for the first credit year and each of the 2 taxable
      years immediately following the first credit year, and
        (2) zero for any other taxable year.
    (c) Eligible employer
      For purposes of this section -
      (1) In general
        The term ''eligible employer'' has the meaning given such term
      by section 408(p)(2)(C)(i).
      (2) Requirement for new qualified employer plans
        Such term shall not include an employer if, during the
      3-taxable year period immediately preceding the 1st taxable year
      for which the credit under this section is otherwise allowable
      for a qualified employer plan of the employer, the employer or
      any member of any controlled group including the employer (or any
      predecessor of either) established or maintained a qualified
      employer plan with respect to which contributions were made, or
      benefits were accrued, for substantially the same employees as
      are in the qualified employer plan.
    (d) Other definitions
      For purposes of this section -
      (1) Qualified startup costs
        (A) In general
          The term ''qualified startup costs'' means any ordinary and
        necessary expenses of an eligible employer which are paid or
        incurred in connection with -
            (i) the establishment or administration of an eligible
          employer plan, or
            (ii) the retirement-related education of employees with
          respect to such plan.
        (B) Plan must have at least 1 participant
          Such term shall not include any expense in connection with a
        plan that does not have at least 1 employee eligible to
        participate who is not a highly compensated employee.
      (2) Eligible employer plan
        The term ''eligible employer plan'' means a qualified employer
      plan within the meaning of section 4972(d).
      (3) First credit year
        The term ''first credit year'' means -
          (A) the taxable year which includes the date that the
        eligible employer plan to which such costs relate becomes
        effective, or
          (B) at the election of the eligible employer, the taxable
        year preceding the taxable year referred to in subparagraph
        (A).
    (e) Special rules
      For purposes of this section -
      (1) Aggregation rules
        All persons treated as a single employer under subsection (a)
      or (b) of section 52, or subsection (m) or (o) of section 414,
      shall be treated as one person.  All eligible employer plans
      shall be treated as 1 eligible employer plan.
      (2) Disallowance of deduction
        No deduction shall be allowed for that portion of the qualified
      startup costs paid or incurred for the taxable year which is
      equal to the credit determined under subsection (a).
      (3) Election not to claim credit
        This section shall not apply to a taxpayer for any taxable year
      if such taxpayer elects to have this section not apply for such
      taxable year.
 

Sources

    (Added Pub. L. 107-16, title VI, Sec. 619(a), June 7, 2001, 115
    Stat. 108.)
 

Amendment of Section

                                 AMENDMENTS

       2002 - Subsec.(e)(1).  Pub. L. 107-147, Sec. 411(m),
       strikes reference to 26 USC 414 (n) and replaces with 26 USC 414 (m).

                           TERMINATION OF SECTION
        For termination of section by section 901 of Pub. L. 107-16,
      see Effective and Termination Dates note below.
 

Miscellaneous

                      EFFECTIVE AND TERMINATION DATES
      Section applicable to costs paid or incurred in taxable years
    beginning after Dec. 31, 2001, with respect to qualified employer
    plans established after such date, see section 619(d) of Pub. L.
    107-16, set out as an Effective and Termination Dates of 2001
    Amendment note under section 38 of this title.
      Section inapplicable to taxable, plan, or limitation years
    beginning after Dec. 31, 2010, and the Internal Revenue Code of
    1986 to be applied and administered to such years as if it had
    never been enacted, see section 901 of Pub. L. 107-16, set out as
    an Effective and Termination Dates of 2001 Amendment note under
    section 1 of this title.
 

References

                   SECTION REFERRED TO IN OTHER SECTIONS
      This section is referred to in sections 38, 39, 196 of this
    title.