Guest Bloggers, Taxes

How the Saver’s Credit Can Help You Save for Retirement

April 14, 2021 • By

Last Updated: April 23, 2021

Catherine Collinson of Transamerica Center for Retirement Studies at Marketplace Studios in Los Angeles, CA.Saving for retirement can be difficult in the best of times, but even harder during a pandemic and challenging economy. An underutilized tax credit, known as the Saver’s Credit, may be able to make it easier.

In a nutshell, the Saver’s Credit is a tax credit that is intended to promote retirement savings among people who may find it hard to save. It is an additional benefit that goes beyond tax-deferred savings, and reduces your tax bill dollar-for-dollar by the amount of the credit.

The Saver’s Credit can reduce an eligible taxpayer’s federal income taxes when they save in a qualified retirement plan, such as a 401(k), or in an individual retirement account (IRA). Unfortunately, at Transamerica Center for Retirement Studies® we consistently find that awareness of this credit is low. In fact, our 2019 retirement survey of workers found that only 43 percent of U.S. workers were aware of this credit.

Saver’s Credit eligibility is based on your contributions to a 401(k), 403(b) or similar employer-sponsored retirement plan, a traditional or Roth IRA, or an ABLE account for which you are the designated beneficiary. Depending on your adjusted gross income (AGI) reported on your IRS Form 1040 series return, the amount of the credit is 50 percent, 20 percent, or 10 percent of your contribution. For tax year 2020, the following maximum AGIs apply:

  • Single tax filers: $32,500.
  • Heads of households: $48,750.
  • Married and filing jointly: $65,000.

Additionally, the taxpayer must be 18 or older, cannot be a full-time student, and cannot be claimed as a dependent on another person’s tax return.

Important things you need to know:

  1. The IRS offers a quiz on its website to easily determine if you qualify for the credit.
  2. You need to complete IRS Form 8880 if you are preparing your tax return manually. Note that on this form the Saver’s Credit is called the “Credit for Qualified Retirement Savings Contributions.”
  3. The IRS has several Free File partners that offer online, free tax preparation tools for taxpayers with a max AGI of $72,000.
  4. You can make IRA contributions for tax year 2020 up until May 17. As of tax year 2020, there is no longer a maximum age for making IRA contributions.

You can find more details in English and Spanish at and

SSA’s posting of this blog does not constitute an endorsement or recommendation of any non-SSA organization or author.

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  1. Phyllis Webb

    I will need to look into this some more. As she said i was unaware of this saving program.

  2. Joe Carrow

    Good share. Thanks to

  3. Cassady M

    You’re eligible for the saver’s credit if you are 18 or older, not a full-time student and not claimed as a dependent on another person’s tax return. Thanks

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  4. Elizabeth

    I think that any pensioner should take care of the savings ( Not in every case, the person will receive a larger pension, despite the length of employment.

  5. Jeff Rose

    Certain families could also benefit from the Child Tax Credit which is up to $2,000 per child if you meet certain income requirements.

    Look at a Schedule 8812 to see if it works for your situation. Here’s some more info that could also be helpful:


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