What is the limit for employer matching and nonelective contributions made to employees greater than $1,000?

The Small Employer Contributions Credit is subject to a $1,000 limit per employee after taking into account the percentage that applies to the first through fifth years of the plan.

Therefore, if you have employees for whom you made employer contributions (not including elective deferrals, as defined in section 402(g)(3)) of more than $1,000 (and the contributions aren't disqualified because you paid the employee wages in excess of $105,000), first determine the amount of contributions made for each individual employee for the tax year. For this purpose, don't include contributions greater than the amount specified below for the plan year.

• If this is treated as the first or second year of the plan, don't include contributions of more than $1,000 per employee.
• If this is treated as the third year of the plan, don't include contributions of more than $1,334 per employee.
• If this is treated as the fourth year of the plan, don't include contributions of more than $2,000 per employee.
• If this is treated as the fifth year of the plan, don't 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.