Form 8881 

(Rev. December 2013)

Department of the Treasury 

Internal Revenue Service 

Credit for Small Employer Pension Plan 

Startup Costs 

▶ Attach to your tax return. 

▶ Information about Form 8881 and its instructions is at www.irs.gov/form8881.

OMB No. 1545-1810 

Attachment 

Sequence No. 130

Name(s) shown on return Identifying number 

1 Qualified startup costs incurred during the tax year. Do not enter 

more than $1,000. . . . . . . . . . . . . . . . . 1 

2 Enter one-half of line 1 . . . . . . . . . . . . . . . . . . . . . . . . . 2 

3 Credit for small employer pension plan startup costs from partnerships and S corporations . . 3 

4 Add lines 2 and 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 

5 Enter the smaller of line 4 or $500. Partnerships and S corporations, report this amount on 

Schedule K. All others, report this amount on Form 3800, line 1j . . . . . . . . . . . 5 

For Paperwork Reduction Act Notice, see instructions. Cat. No. 33435N Form 8881 (Rev. 12-2013)
Form 8881 (Rev. 12-2013) Page 2 

General Instructions 

Section references are to the Internal Revenue Code unless 

otherwise noted. 

Future Developments

For the latest information about developments related to Form 

8881 and its instructions, such as legislation enacted after they 

were published, go to www.irs.gov/form8881. 

Purpose of Form 

Eligible small employers use Form 8881 to claim the credit for 

qualified startup costs incurred in establishing or administering 

an eligible employer plan. 

The credit is allowed under section 45E and is part of the 

general business credit. You may elect, however, to have 

section 45E not apply for the tax year the credit is available by 

not claiming it on your tax return for that year. 

Taxpayers, other than partnerships and S corporations, 

whose only source of this credit is from a partnership or S 

corporation, are not required to complete or file this form. 

Instead, they can report this credit directly on Form 3800. 

How To Figure the Credit 

For an eligible small employer, the credit is 50% of the qualified 

startup costs paid or incurred during the tax year. The credit is 

limited to $500 per year for the first credit year and each of the 

following 2 tax years. No credit is allowed for any other tax year. 

Eligible small employer. To be an eligible small employer, you 

must have had no more than 100 employees during the tax year 

preceding the first credit year who received at least $5,000 of 

compensation from you during that tax year. However, you are 

not an eligible small employer if, during the 3 tax years 

preceding the first credit year, you 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 new qualified employer plan. See 

section 45E(c) for rules for controlled groups and predecessor 

employers. 

Qualified startup costs. Qualified startup costs are expenses 

paid or incurred in connection with: (a) establishing or 

administering an eligible employer plan; or (b) the retirementrelated education of employees about the plan. 

Eligible employer plan. An eligible employer plan is a qualified 

employer plan (as defined in section 4972(d)) with at least one 

employee eligible to participate who is not a highly 

compensated employee. All eligible employer plans of the same 

employer are treated as one eligible employer plan. 

First credit year. The first credit year generally is your tax year 

that includes the date that the eligible employer plan becomes 

effective. However, you may elect to have the preceding tax 

year be the first credit year, and claim the credit for qualified 

startup costs paid or incurred during that tax year. For example, 

a calendar-year eligible small employer whose eligible plan is 

first effective on January 1, 2014, may elect to treat 2013 as the 

first credit year and claim the credit on its 2013 tax return for 

qualified startup costs incurred in 2013. 

No Deduction Allowed for Credit Amount 

You must reduce your otherwise allowable deduction for startup 

costs by the credit amount on line 2. 

Member of Controlled Group or Business 

Under Common Control

For purposes of figuring the credit, all members of a controlled 

group of corporations (as defined in section 52(a)), all members 

of a group of businesses under common control (as defined in 

section 52(b)), and all members of an affiliated service group (as 

defined in section 414(m)), are treated as a single employer. As 

a member, compute your credit based on your proportionate 

share of qualified startup costs giving rise to the group’s credit 

for small employer pension plan startup costs. Enter your share 

of the credit on line 2. Attach a statement showing how your 

share of the credit was figured, and write “See Attached” next to 

the entry space for line 2.

Paperwork Reduction Act Notice. We ask for the information 

on this form to carry out the Internal Revenue laws of the United 

States. You are required to give us the information. We need it 

to ensure that you are complying with these laws and to allow 

us to figure and collect the right amount of tax. 

You are not required to provide the information requested on 

a form that is subject to the Paperwork Reduction Act unless 

the form displays a valid OMB control number. Books or 

records relating to a form or its instructions must be retained as 

long as their contents may become material in the 

administration of any Internal Revenue law. Generally, tax 

returns and return information are confidential, as required by 

section 6103. 

The time needed to complete and file this form will vary 

depending on individual circumstances. The estimated burden 

for individual taxpayers filing this form is approved under OMB 

control number 1545-0074 and is included in the estimates 

shown in the instructions for their individual income tax return. 

The estimated burden for all other taxpayers who file this form is 

shown below. 

Recordkeeping . . . . . . . . . . . 5 hr., 58 min.

Learning about the law or the form . . . . . . 53 min.

Preparing and sending the form to the IRS . . 1 hr., 1 min. 

If you have comments concerning the accuracy of these time 

estimates or suggestions for making this form simpler, we would 

be happy to hear from you. See the instructions for the tax 

return with which this form is filed.