A Tax Credit for Savers: Do You Qualify?

Kelly Phillips Erb
Updated
The Savers Credit allows people to receive a tax credit for their savings contributions
The Savers Credit allows people to receive a tax credit for their savings contributions

These days, almost everyone is looking for more ways to save money. What if you could save money and get a tax break for doing it? Under the ramped-up Retirement Savings Contribution Credit, sometimes called the Savers Credit, you can.

If you make qualifying contributions to an IRA, 401(k) and certain other retirement plans, you may be able to take a tax credit of up to $1,000 for individual taxpayers or up to $2,000 for married taxpayers filing jointly. Qualifying contributions include those, other than rollover contributions, made to a traditional or Roth IRA; elective deferrals to a 401(k) plan (including a SIMPLE 401(k)); a section 403(b) annuity; an eligible deferred compensation plan of a state or local government (a governmental 457 plan); a SIMPLE IRA plan; a SEP; or contributions to a 501(c)(18)(D) plan. In other words, almost every kind of mainstream retirement plan qualifies.

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