FAQ 2232: Contribution Credit Calculation for Form 8881

Problem: Download and extract the wizard ContributionCreditListing_Form8881.zip file and run this wizard from an opened plan in ASC for a DC plan.

Solution: Use this export result file in conjunction with Form 8881 to help solve for Section 2, 6b and 6c contribution amounts. The Column 6c amounts and Column 6b <1000 amounts should be results transferred to the form Section 2, 6b and 6c. Tax year credit will trigger adjustments to the amounts for 6c upon the input of 1-5. According to the instructions for line 6c the years 1-2 are the same but year 3 adjusts the 1000 to 1334 and year 4 adjusts the 1000 to 2000 and year 5 is adjusted to 4000. Line 6c The employer contribution credit is subject to a $1,000 limit per employee after taking into account the percentage that applies on Line 6g to the first through fifth years of the plan. Therefore, if you have employees for whom you made employer contributions (see Small Employer Contributions Credit , earlier), first determine the amount of contributions for the tax year made for each individual employee who received employer contributions of more than $1,000 (and who are not disqualified because they received wages of more than $105,000). For this purpose, do not include an amount greater than the amount specified below for the plan year. If this is treated as the first or second year of the plan, do not include contributions of more than $1,000 per employee. If this is treated as the third year of the plan, do not include contributions of more than $1,334 per employee. If this is treated as the fourth year of the plan, do not include contributions of more than $2,000 per employee. If this is treated as the fifth year of the plan, do not include contributions of more than $4,000 per employee. After determining the amount for each individual employee, add the amounts together and enter the total on line 6c. All amounts should be checked prior to input to Form 8881.