Benefits Plans - Retirement Savings Plans: irs retirement saver's credit

What is the Saver’s Credit?

This is a nonrefundable tax credit available to eligible individuals who make elective contributions to certain types of retirement plans. Its purpose is to encourage people to save for retirement. Consult with a qualified tax advisor for more information and to see if you qualify.

Eligible Contributions

You may be eligible for a credit of up to $1,000 for combined voluntary contributions you make to the following types of plans:

  • Employer-sponsored 401(k) or 403(b) plans, a governmental 457(b) plan, SIMPLEs, and SEPs.
  • Individual or spousal contributions to an IRA, (both traditional and Roth).
  • After-tax contributions you make to a qualified retirement plan.

Maximum Contribution and Credit

Annual contributions of up to $2,000 may be considered for this credit. Depending on your adjusted gross income, you may be eligible to take the credit for up to 50% of the contribution, with a maximum credit of $1,000.

Who is Not Eligible

You are not eligible for the credit if any of the following conditions apply to you:

  • Your adjusted gross income for 2011 is more than $27,500 ($41,625 if head of household; $55,500 if married filing jointly).
  • You are under age 18.
  • You are claimed as a dependent on another taxpayer’s tax return, or are a full-time student.

The Amount of the Credit

If you are eligible, the amount of the saver’s credit is based on the adjusted gross income (AGI) of you and your spouse. See the chart below for more specific information.

Other Considerations

The credit is reduced by taxable distributions taken from an employer-sponsored retirement plan or IRA by you or your spouse during the year the credit is claimed, during the two preceding years, or during the time between the end of the year the credit is claimed and the due date for the taxpayer’s income tax return. The reduction also applies to any Roth IRA distribution that is not rolled over, regardless of whether it is taxable.

Eligibility and Amount of Credit

Adjusted Gross Income

 

Amount of credit

Single or

Married filing separately

Head of household

Married filing jointly

$16,750 or less

$25,125 or less

$33,500 or less

50%

$16,751 to $18,000

$25,126 to $27,000

$33,501 to $36,000

20%

$18,001 to $27,750

$27,001 to $41,625

$36,001 to $55,500

10%

These limits are periodically indexed by the IRS.

Next: Federal Income Tax

 

Limitations
The University of Michigan in its sole discretion may modify, amend, or terminate the benefits provided with respect to any individual receiving benefits, including active employees, retirees, and their dependents. Although the university has elected to provide these benefits this year, no individual has a vested right to any of the benefits provided. Nothing in these materials gives any individual the right to continued benefits beyond the time the university modifies, amends, or terminates the benefit. Anyone seeking or accepting any of the benefits provided will be deemed to have accepted the terms of the benefits programs and the university's right to modify, amend or terminate them.