Build Up Your Retirement Fund With The Saver’s Credit


It might be hard to think about saving for retirement when present-day expenses threaten to derail your budget. If you are a low-to-moderate income person, you can still save for retirement without straining your existing resources. The Retirement Savings Contribution Credit AKA “The Savers Credit” is intended to help low-income taxpayers save for retirement.

What Is It?

The Saver’s Credit helps low-income taxpayers make contributions to retirement plans such as IRAs, 401(k)s or other employer-sponsored retirement plans. Although it was intended to be a temporary credit in 2002, it eventually was made permanent in 2006.This credit in unique n that it is one of the few credits offered to couples who file separate returns.


Eligibility for this credit is based on your tax filing status, Adjusted Gross Income (AGI) and your overall tax liability. If there is any excess credit left over, it can’t be issued to you as a refund. In addition to the income guidelines, you’ll need to be over 18, and not be considered a full-time student (if you attended college full-time for at least five months during the tax year, the IRS will consider you to be a full-time student). You also cannot be claimed as a dependent on anyone else’s tax return.

How It Works

You will need to complete and attach form 8880 to your tax return when you file your taxes. The maximum credit amount you can receive is $2000.00 (single or filing separately) or $4000.00 (filing jointly).

The Savers Credit can help take the pinch out of retirement savings for income-eligible people. If your employer offers a retirement plan, and if you meet the income guidelines established by the IRS, saving for retirement just got easier.

As with any tax matter, if you’re unsure as to whether or not you qualify for this credit, it’s always a good idea to check with a tax advisor or tax prep volunteer at tax time.