Skip to main content

Announcing our new Southwestern Ohio Division!

Happy young couple calculating bills at home

Tax Saver’s Credit: Found Mon$y for Retirement

We all know how hard it is to find money to save for retirement, but did you know that the government offers a tax credit for participating in your retirement plan? Think of it as an instant reduction to your taxes…what’s not to love?

The Saver’s Tax Credit is designed for those with low to moderate incomes and has the potential to reduce your tax bill by up to $1,000 when you make contributions to your employer sponsored retirement plan. Your tax credit can be as low as 10% or as high as 50% depending on your adjusted gross income and filing status (see the table below). A credit is a dollar for dollar reduction in your tax bill, which makes it even better!

Let’s look at an example. Sue and Joe are married, filing jointly with an Adjusted Gross Income of $38,000. They each contribute $2,000 to their respective employer retirement plans – for a total contribution of $4,000. Looking at the chart below, they would qualify for a 50% tax credit. For them, that means a credit of $2,000 off their tax bill! They each have been able to maximize the allowable credit by contributing $2,000. So, in essence, it only “cost” them $1,000 to to have a $2,000 addition to their accounts.

The Tax Saver’s Credit is applicable to virtually all employer-sponsored retirement plans including 401(k), 403(b), 457(b), Simple, as well as SEP plans. However, there are a few requirements that must be met in order to qualify for the Tax Saver’s Credit. You must be at least 18 years old, not a full-time student, and not claimed as a dependent on someone else’s tax return.

The Tax Saver’s Credit can help those who qualify to BOTH save for retirement and save taxes! A win-win!

Voya Chart

Related Insights
BEATLES 1600px

What Do The Beatles, Financial Behavioral Bias Have in Common?

Behavioral biases can cause your investing strategy to get out of sync with your risk tolerance and goals. One common financial behavioral bias is rationalizing poor past decisions. Learn how to recognize when this and other biases have crept into your thinking.

Read More
Succession Planning Blog Pic

Succession Planning is Critical for Every Small Business Owner

Small Business owners invest a great deal of time, energy and money into their business, and it can easily be the largest portion of their investment portfolio. All too commonly, business owners direct the lion’s share of their effort toward day-to-day activities of the business and fail to capitalize on the value that they have worked so hard to create in preparation of retirement. However, with a well-thought-out succession plan business owners have an increased level of control over their own future as well as the future of their business.

Read More
I Stock 1185723495 DJM Blog FINAL

Financial Infidelity: Are You Cheating on your Honey with Money?

Keeping secrets and lying to your partner about your spending habits can make any relationship go very wrong. It's officially called financial infidelity, and if gone unchecked can quickly spiral out of control. Learn the signs of financial infidelity and ways to overcome it.

Read More
Play