Workers can take steps now to save for retirement and earn a special tax
credit now and in the years ahead. The saver’s credit helps offset part
of the first $2,000 workers voluntarily contribute to IRAs, 401(k) plans
and similar workplace retirement programs.
One can set up a new individual retirement arrangement or add money to
an existing IRA to qualify for the credit and have until the tax filing
deadline to add funds. Elective deferrals, however, must be made by the
end of the year to a 401(k) plan, a 403(b) plan for employees of public
schools and certain tax-exempt organizations, a governmental 457 plan
for state or local government employees, and the Thrift Savings Plan for
federal employees.
Like other tax credits, the saver’s credit can increase a taxpayer’s
refund or reduce the tax owed. The saver’s credit supplements other tax
benefits available to people who set money aside for retirement.
Special rules that apply to the saver’s credit include the following:
Eligible taxpayers must be at least 18 years of age.
Anyone claimed as a dependent on another return cannot take the credit.
A student cannot take the credit.
