A tax credit available to low- and moderate-income workers who save for retirement is going begging, possibly to millions of eligible people, largely because they're unaware of its existence.
So says Transamerica Center for Retirement Studies, which points to the Saver's Credit, also referred to as the Retirement Savings Contributions Credit by the Internal Revenue Service.
The credit is available to low- to moderate-income workers who are saving for retirement.
Recommended For You
However, Transamerica found that only 25 percent of American workers with annual household incomes of less than $50,000 even know it exists.
That surprising news came to light as part of the results of the 16th annual Transamerica Retirement Survey, and the firm points out that with so many workers needing to save more for retirement, they need to be made aware of this additional opportunity to save.
The Saver's Credit is a tax credit that may be applied to the first $2,000 of voluntary contributions an eligible worker makes to a 401(k), 403(b) or similar employer-sponsored retirement plan, or to an IRA. The maximum credit is $1,000 for single filers or individuals and $2,000 for married couples.
That's over and above the tax savings workers get for saving in such a plan in the first place, according to Catherine Collinson, president of the nonprofit Transamerica Center for Retirement Studies. Collinson said in a statement, "Because this double benefit sounds too good to be true, many eligible savers may be actually confusing the two incentives."
The credit is available to workers aged 18 years or older who have contributed to a company-sponsored retirement plan or IRA in the past year and meet the Adjusted Gross Income (AGI) requirements.
That means that single filers with an AGI of up to $30,500 in 2015 or $30,750 in 2016 are eligible. For the head of a household, the AGI limit is $45,750 in 2015 or $46,125 in 2016, and for those who are married and filing a joint return, the AGI limit is $61,000 in 2015 or $61,500 in 2016
Additionally, the filer cannot be a full-time student or be claimed as a dependent on another person's tax return.
Workers can't claim the Saver's Credit on Form 1040EZ, however. They should use Form 1040, Form 1040A or Form 1040NR.
© 2025 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
