Retirement Stimulus: See if You Qualify for the $2,000 Saver’s Credit

Retired senior woman gardening in back yard stock photo
Stígur Már Karlsson /Heimsmyndir /

Concerns over how the Social Security system will hold up under an avalanche of new retirees have the federal government coming up with all kinds of ways to encourage people to save for retirement — including paying you for contributing to your retirement account.

This comes in the form of the Saver’s Credit, formerly known as the Retirement Savings Contribution credit. The Saver’s Credit provides a tax break for making eligible contributions to your individual retirement account or employer-sponsored retirement plan. It is available to earners with modest income who save for retirement.

You can get a credit worth as much as $2,000 if you file as a married couple, or $1,000 if you file as single.

According to the IRS, you’re eligible for the credit if you are 18 years old or older, are not claimed as a dependent on another person’s return and are not a student. You are considered a student if during any part of five calendar months of the tax year you were enrolled as a full-time student at a school, or you took a full-time, on-farm training course given by a school or a state, county or local government agency.

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

  • Contributions you make to a traditional or Roth IRA
  • Elective salary deferral contributions to a 401(k), 403(b), governmental 457(b), SARSEP, or SIMPLE plan
  • Voluntary after-tax employee contributions made to a qualified retirement plan (including the federal Thrift Savings Plan) or 403(b) plan
  • Contributions to a 501(c)(18)(D) plan, or
  • Contributions made to an ABLE account for which you are the designated beneficiary (beginning in 2018)
Are You Retirement Ready?

Rollover contributions don’t qualify for the credit. In addition, your eligible contributions might be reduced by any recent distributions you received from a retirement plan or IRA, or from an ABLE account.

The maximum contribution amount that might qualify for the credit is $2,000 if you file single and $4,000 if you are married filing jointly, therefore making the maximum credit $1,000 for single filers and $2,000 those those who are married filing jointly.

This is the IRS chart you can use to calculate your credit: 

Credit Rate Married Filing Jointly Head of Household All Other Filers*
50% of your contribution AGI not more than $41,000 AGI not more than $30,750 AGI not more than $20,500
20% of your contribution $41,001-$44,000 $30,751-$33,000 $20,501-$22,000
10% of your contribution $44,001-$68,000 $33,001-$51,000 $22,001-$34,000
0% of your contribution more than $68,000 more than $51,000 more than $34,000

*Single, married filing separately, or qualifying widow(er)

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