IRS encourages low and moderate-income workers to save for retirement and access special tax credits in 2024

The Internal Revenue Service (IRS) has issued a vital reminder to low and moderate-income workers, urging them to start saving for retirement now and potentially benefit from a special tax credit in 2024 and subsequent years. The "Saver's Credit," also known as the "Saver's Credit," provides support to workers by offsetting part of the first $2,000 they contribute independently to their Individual Retirement Arrangements (IRA), 401(k) retirement plans, and similar employer-sponsored retirement programs. This credit also aids eligible individuals with disabilities who are designated beneficiaries of Enhanced Life Experience (ABLE) accounts. The credit, which can reach up to $1,000 ($2,000 for married couples), has the potential to increase refunds or reduce the amount of taxes owed, although its impact may vary depending on other deductions and credits. It's essential to note that distributions from retirement plans or ABLE accounts can affect the contribution amount used to determine the credit.  

Contribution Deadline: For those with IRA accounts, the deadline to establish a new arrangement or add money to an existing arrangement is April 15, 2024, coinciding with the tax filing deadline for the 2023 fiscal year. This opportunity extends to traditional and Roth IRA arrangements. Participants in employer-sponsored retirement plans still have time to make contributions and take advantage of the Saver's Credit on their 2023 tax returns. Deferral choices must be made by December 31 for plans such as the 401(k), 403(b), Governmental 457 Plan, and the Thrift Savings Plan for Federal Government Employees (TSP). It is recommended to consult the instructions for Form 8880, "Credit for Qualified Retirement Savings Contributions," for detailed information on eligible workplace retirement plans.  

Eligibility: To be eligible, the taxpayer must be 18 years or older, not claimed as a dependent on someone else's tax return, and not a full-time student. Income limits are based on the taxpayer's adjusted gross income and tax filing status.  

In 2023, income limits are:  

• Married individuals filing jointly with incomes up to $73,000.  

• Heads of households with incomes up to $54,750.  

• Married individuals filing separately and singles with incomes up to $36,500.  

Taxpayers can use the Interactive Tax Assistant for the Saver's Credit to determine their eligibility. For more information on rules, contribution rates, and credit limits, taxpayers are invited to visit the dedicated "Saver's Credit" page on IRS.gov.  
 
 
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