Transamerica Center for Retirement Studies (TCRS) research shows that only 25% of American workers with annual household incomes of less than $50,000 are aware of the Saver’s Credit, also known as the Retirement Savings Contributions Credit.
TCRS President Catherine Collinson explains to PLANSPONSOR that the Saver’s Credit is a tax credit available to eligible low- to moderate-income tax filers who save for retirement through a qualified 401(k) or 403(b) plan, IRA, or myRA.
“Plan sponsors can play an important role in raising awareness about the Saver’s Credit by incorporating it into their communications campaigns to their employees,” Collinson says. “Examples include: posting information on their websites, sending informative emails, and hanging posters in break rooms and bulletin boards.”
Transamerica Center for Retirement Studies has dedicated a section of its website to the Saver’s Credit that includes materials that employers can use. A fact sheet is available that explains the Saver’s Credit, including eligibility requirements and how to claim it, and is available in both English and Spanish. TCRS also has a sample newsletter article and infographic/posters available for employer use that can be downloaded from the website.
Workers may qualify for the Saver’s Credit of up to $1,000 ($2,000 if married filing jointly) for contributions made to a qualified retirement plan, IRA, or myRA. And they have until April 18, 2016, to make contributions to an IRA or myRA for 2015. Unlike a tax deduction, a credit is a dollar-for-dollar reduction of the tax filer’s federal income tax liability. This credit can reduce the amount of tax owed or increase a refund for taxes already paid.
For details about eligibility for the credit, refer to this fact sheet.