‘Saver’s Credit’ – Helping eligible taxpayers offset the cost of saving for retirement
In terms of financial planning, saving for retirement is a common goal that quickly comes to mind for most people. However, in today’s world, it can prove to be a difficult task to cover basic cost of living needs and expenses for a family, while also striving to save enough for a distant, somewhat unknown time in the future.
This is where the “Saver’s Credit” may help for some. To encourage individuals with low and modest incomes to set savings aside for retirement, there exists a “Retirement Savings Contributions Credit,” known as the “Saver’s Credit.”
What is the Saver’s Credit, you ask? The Saver’s Credit is a tax break for qualifying individuals to help alleviate some of the burden when it comes to retirement savings. It’s available to tax payers who contribute to certain retirement accounts during the year, including contributions to an IRA on your own as well as any contributions you have made to an employer-provided plan at work, such as a 401(k) or 403(b) plan.
Up to $2,000 in voluntary contributions can count toward the credit. Depending on filing status and income level, the credit pays between 10 and 50 percent. To claim the credit while filing taxes, there are a few additional requirements to meet. You have to be 18 years or older, not a full-time student and you can’t be claimed as a dependent on anyone else’s tax return.
Consider beginning or increasing voluntary retirement contributions through a workplace retirement savings plan to maximize savings for the 2020 tax year. Keep in mind, the Saver’s Credit applies only to contributions made to Purdue’s 403b Voluntary Savings retirement plan. However, you are able to contribute on a pre-tax basis to both the 403b and 457 Voluntary plans.
Get more information about the saver’s credit, including the 2020 income limits and credit amounts, on the IRS website. Fidelity representatives can provide assistance with the Saver’s Credit, retirement planning, voluntary retirement contribution setup and Purdue’s retirement program in general.
Call Fidelity at 800-544-6868 or meet with a Fidelity representative in the Fidelity Investor Center located in the Purdue Memorial Union on Purdue’s West Lafayette campus. The campus office is open 8:30 a.m. to 5 p.m. Monday through Friday. To make an appointment, call 800-642-7131 or schedule online. Employees at the regional campuses also can schedule for their respective campuses via the same number and link.
- January 2020 Issue 12
- ‘Saver’s Credit’ – Helping eligible taxpayers offset the cost of saving for retirement
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