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Form 8881 Instructions - Small Employer Contribution Credit

Level 2

Hi, I have questions about the Form 8881 instructions:

Line 6a

Enter the number of your employees during the tax year preceding the tax year for which the credit is claimed.   What is the definition of "employees" and does it have any compensation limit?

Line 6c

If the retirement plan was adopted in 2020, would it be treated as the fourth year (in 2023) of the plan, and do not include contributions of more than $2,000 per employee for employer contribution credit calculation. Is my assumption correct?



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