Many participants in your plan may be eligible for a Retirement Savings Contributions Credit, more commonly known as The Saver’s Credit, and not realize it. All participants making elective deferrals are eligible if they are adults, not claimed on another person’s tax return, and are not a full-time student. The amount they can claim is based on their Adjusted Gross Income.
Depending on the eligible participant’s income, they will be eligible for a credit of 50%, 20% or 10% of their elective contributions. The maximum contribution amount that may qualify for the credit is $2,000 ($4,000 if married filing jointly), making the maximum credit $1,000 ($2,000 if married filing jointly).
The below chart outlines the percentage of credit a participant can claim for 2021, based on their Adjusted Gross Income.
2021 Saver’s Credit
|Credit Rate||Married Filing Jointly||Head of Household||All Other Filers|
|50% of your contribution||AGI not more than $39,500||AGI not more than $29,625||AGI not more than $19,750|
|20% of your contribution||$39,501 – $43,000||$29,626 – $32,250||$19,751 – $21,500|
|10% of your contribution||$43,001 – $66,000||$32,251 – $49,500||$21,501 – $33,000|
|0% of your contribution||more than $66,000||more than $49,500||more than $33,000|