The employee contribution is from their wages. That isn't part of the costs for administration or operation or establishing the plan (not part of the credits here).

The addition of auto-enrollment is as an incentive for the employer. It's a signup option, not part of contributions.

One reason employers set up a SIMPLE IRA plan is that a 401(k) has more costs to set up and administrate. That's an example of a less lucrative plan for the employees, because there is a cost savings to the employer, but the provisions with these two Acts allow for the employer to realize a benefit even if setting up the higher cost plan.

"I think this credit is max $5000 not $500."

Yes. As explained in that article, this started in 2019, expanded in 2020, and was modified in 2023: "In December 2023, Congress passed the Consolidated Appropriations Act (CAA) as part of its COVID-19 relief measures. The CAA expanded on many aspects of the SECURE Act, including increasing credit rates under the IRS Form-8881 from half up to $500/year to up to $5,000/year."

That's why I offered this article to you.

"can apply this credit for 3 years if employer run this set-up one more time"

There are not further setup costs. The provisions for this credit are for more than just setup, and for more than the first year. There is only one startup for a plan. There might be ongoing legal guidance. There is education provided to info employees and enrollment period costs, and other administrative and operational costs. The plan can have startup in the year before it becomes on offer, as well. That's why you would need to read through all the eligibility criteria.

I suggest making a professional connection to a benefit plan provider. Network with others who specialize in the various touchpoints you run into. No one is expected to know everything; you want resources.