What is IRS Form 8881?
Form 8881 is the IRS form eligible small employers use to claim certain tax credits for offering a retirement plan. Its full name is Credit for Small Employer Pension Plan Startup Costs, Auto-Enrollment, and Military Spouse Participation.
Depending on your situation, these credits may help offset the costs of starting and running your 401(k) plan, adding automatic enrollment, or making employer contributions.
Does Betterment prepare or file Form 8881?
No. Form 8881 is a tax form that your business files with its federal tax return. Betterment does not prepare or file it on your behalf.
We recommend working with your accountant or tax advisor to complete the form. Betterment can provide plan documents and records to support your filing.
Is my business eligible for these tax credits?
Eligibility depends on factors like your company's size, employee compensation, when your plan started, and which plan features you offer. Because every business's tax situation is different, your accountant or tax advisor is the best person to confirm which credits you qualify for.
To learn more about the credits available, see How tax credits can make offering a 401(k) affordable (https://www.betterment.com/work/resources/secure-2-0-401k-tax-credits).
Where can I find Form 8881 and its instructions?
You can download Form 8881 and its instructions directly from the IRS:
- About Form 8881 (https://www.irs.gov/forms-pubs/about-form-8881)
- Instructions for Form 8881 (https://www.irs.gov/instructions/i8881)