The Saver’s Credit program, also referred to as the Retirement Savings Contributions Credit by the IRS, offers benefits to both employers and their employees, but more than half of Americans aren’t familiar with it, according to the results of a new survey.
“In addition to the other tax advantages of saving for retirement in a 401(k), 403(b) or [individual retirement account], the Saver’s Credit is a benefit that may reduce a person’s federal tax bill,” Catherine Collinson, CEO and president of Transamerica Institute and TCRS, said in a statement. “Many retirement savers could be confusing these tax incentives simply because the idea of multiple benefits sounds too good to be true.”
Only 53% of Americans are aware of the program, according to the Transamerica Institute.
The credit is available to individuals aged 18 or more years who have contributed to a 401(k), 403(b) or similar employer-sponsored retirement plan, a traditional or Roth IRA, or an ABLE account in the past year and meet the adjusted gross income requirements.
It may benefit employers as well, because under the Setting Every Community Up for Retirement Enhancement Act 2.0, or SECURE 2.0, they can make contributions toward their employees’ retirement savings.
“SECURE 2.0 is aimed at incentivizing small employers to offer retirement programs, through plan startup tax credits and further modifications to pooled employer plans and multiple employer plans,” attorney Jeffrey D. Smith, a partner at Fisher Phillips and a member of the firm’s Employee Benefits Practice Group, previously told the McKnight’s Business Daily.
The credit is up to $1,000 (or $2,000 for people who are married and filing their taxes jointly). According to TCRS’ analysis of the most recently published IRS data, the average amount of the Saver’s Credit in 2021 was $191.
The deadline for making IRA contributions for 2023 tax purposes is April 15.
Learn more about the credit here.
