Sec. 5. Credit for employers with respect to modified safe harbor requirements
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Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section: For purposes of section 38, in the case of a small employer, the safe harbor adoption credit determined under this section for any taxable year is the amount equal to the total of the employer's matching contributions under section 401(k)(14)(D) during the taxable year on behalf of employees who are not highly compensated employees, subject to the limitations of subsection (b). The credit determined under subsection
(a)with respect to contributions made on behalf of an employee who is not a highly compensated employee shall not exceed 2 percent of the compensation of such employee for the taxable year. Credit shall be determined under subsection
(a)with respect to contributions made on behalf of an employee who is not a highly compensated employee only during the first 5 years such employee participates in the qualified automatic contribution arrangement. Any term used in this section which is also used in section 401(k)(14) shall have the same meaning as when used in such section. The term small employer means an eligible employer (as defined in section 408(p)(2)(C)(i)). No deduction shall be allowable under this title for any contribution with respect to which a credit is allowed under this section. . Subsection
(b)of section 38 of the Internal Revenue Code of 1986 is amended— by striking plus at the end of paragraph (35), by striking the period at the end of paragraph
(36)and inserting , plus , and by adding at the end the following new paragraph: the safe harbor adoption credit determined under section 45S. . The table of sections for subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding after the item relating to section 45R the following new item: Sec. 45S. Credit for small employers with respect to modified safe harbor requirements for automatic contribution arrangements. . The amendments made by this section shall apply to taxable years that include any portion of a plan year beginning after December 31, 2014.