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. Steven R Trautman

    Nice information…!

    Thank you

  2. Alexis Sanz

    Very nice post Catherine, I found it explanatory and informative, keep sharing the best content,

    Take care and stay positive,

    best regards

    Alexis S.

  3. mehdi mirzaei

  4. mehdi mirzaei

  5. jessica

    Thanks for sharing this post with us! A retirement plan is very useful for the later time of life, but during this pandemic crisis, it will be becoming harder without government help. The government administration should rethink retirement policies for them during this deadly covid-19 situation. Being a freelance writer, I have to write on different academic topics at this website and help students with their assignment ready. I consider we should have a retirement plan from our young days. By the way, a saver’s credit could be helpful in this regard.

  6. Diane K Kafka

    I am a female Social Security Disability Income Consumer. I find it hard to make ends meet on a monthly basis anyway, even without the COVID health scare. My SSDI does not fit my budget so I either have to work or receive other types of monthly benefits; supplemental income. Can you look into the OD fees that banks charge and make an exception to the rule for the Disabled consumer, especially for mental disabilities. My financial challenges have become overwhelming, month to month. A $36 OD fee is devastating for a consumer who makes say $1200/month. Disabled consumers require more expenses to cover their special needs like medications and therapy and supplements. When a tragedy strikes, or in fact, today, a national health crisis, it affects a consumer receiving benefits and the cost for health care, and daily expenses increase to meet those needs. Our benefits have not increased, except for the Stimulus checks. Could you consider an increase in the next 5 years to compensate for the possible losses of (1) employment; (2)of loved ones; (3) higher rates home utility bills; (4) auto loans; (5) cost of living raises; (6) home schooling costs; (7) food deliveries. My bank won’t stop charging me for -.10 cents OD. It is almost painful rather than a nice way to expedite the bill or check.

    • Ann C., Public Affairs Specialist

      Hi, Diane. We are sorry to hear about your situation. You may be eligible to receive social services from the state in which you live. These services include free meals, housekeeping help, transportation, or help with other problems. To get information about services in your area and find out if you qualify, you will need to contact your state or local social services or welfare office. We hope this helps.

  7. John

    Thanks for sharing this post!

  8. Hilary Andreoletti

    Hey, Dear Thanks But I Have a Question.During this major COVID 19 pandemic. How and why does Social Security Administration hold recipients responsible for mail they did NOT receive even to the point Shakti of stopping their benefits in this major deadly COVID 19 outbreak? Does anyone have an answer at least a logical response? Thanks

  9. Tina

    “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.” Will you provide a table to show what the AGI limit is for 50%, 20%, 10%? or a link to that information?

    Do I get 50% up to a certain amount, then 20% to an amount, then 10% on the remaining as I approach the limit? Or a straight 50%, 20%, or 10%? Is the amount of the credit only based on AGI or a combination of AGI and age?

    “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.” Could you give an example of tax deferred vs this credit. I’m sure “dollar-for-dollar by the amount of the credit” seems straightforward to those in the tax business but, an example would make that statement easier to understand. Thank you!

    • Ann C., Public Affairs Specialist

      Hi, Tina. Thanks for your question. For tax questions, you will need to contact the IRS. Their toll-free number is 1-800-829-1040 or you can visit their website. We hope this helps.


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