IRS · Official form

Form 8881, Credit for Small Employer Pension Plan Startup Costs

Form 8881 lets eligible small employers claim a credit for the cost of starting and running a retirement plan for their employees. Fill in the official IRS PDF below and download it.

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What is 8881?

Form 8881, Credit for Small Employer Pension Plan Startup Costs, is the form small businesses use to claim a general business credit for qualified costs of establishing or administering an eligible employer retirement plan, such as a 401(k), SEP, or SIMPLE IRA plan. The form also covers the separate credit for including an eligible automatic contribution arrangement in the plan.

The credit is aimed at employers with a limited number of employees who are setting up a plan for the first time. Amounts from Form 8881 flow into Form 3800, General Business Credit, on the employer’s income tax return. The SECURE 2.0 Act expanded the credit, so check the current instructions for the rules that apply to your year.

Who files 8881?

Small employers that paid qualified startup costs to establish a new retirement plan
Employers claiming the credit for adding an automatic enrollment feature to their plan
Businesses claiming the credit for military spouse participation in their plan
Partnerships and S corporations, which file the form to pass the credit through to their owners

How to fill out 8881

Enter your name and identifying number as shown on your tax return.
In Part I, enter your qualified startup costs and the number of eligible employees, then figure the credit for the year.
In Part II, figure the credit for an eligible automatic contribution arrangement if your plan includes one.
Complete Part III if you are claiming the military spouse participation credit.
Download the finished PDF and attach it to your return along with Form 3800.

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Page 1 29 fields

Name(s) shown on return

Identifying number

Enter the number of qualifying employees. See instructions.

1. Qualified startup costs incurred during the tax year.

2. Employers with 1–50 employees enter the amount from line 1. Employers with 51–100 employees enter 50% (0.50) of line 1.

3. Enter the number of employees eligible to participate in the pension plan. See instructions.

3. (Number of eligible employees) multiplied by $250.

4. Enter the greater of $500 or the amount from line 3 (Do not enter more than $5,000).

5. Enter the smaller of line 2 or line 4.

Section 2—Small Employer Contributions Credit. 6a. Enter the number of employees from the preceding tax year. See instructions.

6b. Enter employer contributions made to the plan, but don’t include (i) elective deferrals, (i i) contributions made to employees whose

6c. For employees for whom you made matching and nonelective contributions of more than $1,000 (and who are not disqualified because they

6d. Add lines 6b and 6c.

6e(1). Subtract 50 (50.0) from the number of employees entered on line 6a.

6e(2). Multiply line 6e(1) by 2% (0.02).

6e(3). Multiply line 6e(2) by line 6d.

6e(4). Subtract line 6e(3) from line 6d.

6f. If you did NOT complete line 6e, enter the amount from line 6d. If you completed line 6e, enter the amount from line 6e(4).

6g. Applicable percentages. See instructions. If this is treated as the first or second year of the plan, enter the amount from line 6f. If

7. Small employer pension plan startup costs credit and small employer contributions credit from partnerships and S corporations.

8. Add lines 5, 6g, and 7. Partnerships and S corporations, report this amount on Schedule K. All others, report this amount on Form 3800,

9. Enter $500 if an auto-enrollment option is provided for retirement savings. See instructions.

10. Small employer auto-enrollment credit from partnerships and S corporations.

11. Add lines 9 and 10. Partnerships and S corporations, report this amount on Schedule K. All others, report this amount on Form 3800,

12. Enter the number of military spouse employees participating in an eligible plan. See instructions.

12. (Number of eligible employees) multiplied by $200.

13. Amount of contributions paid by employer for each eligible military spouse employee. Do not enter more than $300 per employee. See

14. Small employer military spouse participation credit from partnerships and S corporations.

15. Add lines 12, 13, and 14. Partnerships and S corporations, report this amount on Schedule K. All others, report this amount on Form

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Frequently asked questions

What counts as a qualified startup cost?

Ordinary and necessary costs to set up and administer the plan and to educate employees about it, such as plan document fees and administration fees. The instructions list what qualifies for your tax year.

How many years can I claim the startup credit?

The startup cost credit generally runs for the first few years of the plan, and the auto-enrollment credit has its own multi-year window. Check the current Form 8881 instructions for the exact periods.

Do I still need Form 3800?

Usually, yes. Form 8881 figures the credit, and it is then claimed as part of the general business credit on Form 3800 unless the instructions say otherwise for your situation.

Form 8881, Credit for Small Employer Pension Plan Startup Costs

What is 8881?

Who files 8881?

How to fill out 8881

Quick fill 8881 on this page

Frequently asked questions

Related forms

Form 3800, General Business Credit

Form 8882, Credit for Employer-Provided Childcare Facilities and Services

Form 5305-SEP, Simplified Employee Pension Contribution Agreement