Workers Can Get A Tax Credit for Retirement Savings

Did you know that Uncle Sam will actually give your workers money for saving for retirement?

Well, if you didn’t – you’re not alone.  According to the Transamerica Center for Retirement Studies, more than half of workers (53%) are unaware of the IRS Saver’s Credit, and those with a household income of less than $50,000—who are more likely to be eligible for the credit—are even less likely to be aware of it (39%).

It’s called the Saver’s Credit – designed to encourage low and moderate income workers to save for retirement.  It’s not new – but it’s still a secret to many – and underutilized as a result.

To be sure, it’s only going to work for moderate-income workers – who will have to file a 1040 long form to receive it.  And it will only offset their current tax liability.  Still, it’s free money to them – and an encouragement to save. 

How Much is It?

It might be as much as $1,000 ($2,000 for married couples) – offset against federal income taxes owed.  

Depending on your adjusted gross income reported on the Form 1040, the amount of the credit is 50%, 20%, or 10% of:

The contributions made to an IRA (traditional or Roth),

Contributions made to a 401(k), 403(b), governmental 457(b), SARSEP, or SIMPLE plan,

As well as contributions to a 501(c)(18)(D) plan, or contributions made to an ABLE account for which they are the designated beneficiary (beginning in 2018).

Who’s Eligible?

To be eligible for the credit, they must be:

Age 18 or older,

Not claimed as a dependent on another person’s return, and

Not a student.

How Do You Get It?

Something for your workers to think about as they prepare their 2024 taxes!  

That’s Wella’s Way!