Channel3000.com
December 20, 2020 5:33 AM
newsfeedback@fool.com (Matthew Frankel, CFP)
Posted:
Updated:
December 21, 2020 10:20 AM
The Saver’s Credit, formally known as the Retirement Savings Contribution Credit, is designed to encourage low- to middle-income taxpayers to save for retirement.
We’ll get to the qualification rules later, but the idea is that the credit can be worth as much as $1,000 per year, per person (married couples can get a credit of as much as $2,000). Depending on their income, the credit can be worth 10%, 20%, or 50% of contributions made to an eligible retirement account, up to a maximum of $2,000.
The credit can be taken for pretty much any tax-advantaged retirement account you can think of. You can use the Saver’s Credit if you contribute to an employer’s 401(k) plan at work, for example. Or if you open a traditional or Roth IRA and make a contribution, you can use that to qualify for the Saver’s Credit as well.