Tax Credit for IRAs and Retirement Plans (Saver's Credit)
- Broadridge Content
The Economic Growth and Tax Relief Reconciliation Act of2001 made significant changes to IRAs and retirement plans. One provision ofthe act allows some low- and middle-income taxpayers to claim a partial,nonrefundable income tax credit (the "saver's credit") for contributing tocertain tax-deferred retirement savings vehicles. The credit can be appliedagainst the taxpayer's regular income tax liability (or minimum tax liability,if paying under the alternative minimum tax system) and is in addition to anyincome tax deduction the taxpayer receives for making the contribution. Thepurpose of this provision is to encourage retirement savings among those who,typically, can least afford to save.
