Benefits from ‘Saver's Credit’

LEARN HOW YOUR PLANNED GIFT CAN HELP THE AMERICAN LEGION

In IR-2023-222, the Internal Revenue Service (IRS) reminded low- and moderate-income taxpayers that they can benefit from a "Saver's Credit" in 2024.

The Saver's Credit allows individuals to contribute up to $2,000 to a retirement plan and receive a credit. The credit is also available to individuals who are a beneficiary of an Achieving a Better Life Experience (ABLE) account.

The maximum credit is $1,000 for a retirement contribution of $2,000. The maximum is increased to $2,000 for a retirement contribution of $4,000 by a married couple.

Taxpayers 18 or older are eligible for the Saver's Credit if they are not claimed as a dependent on another individual's tax return and not a student. A student is defined as a person who was a full-time student or in a full-time training course for five calendar months during a tax year.

The Saver's Credit is 50% of the initial income level, 20% for the next level and 10% for the third level. The contribution of up to $2,000 may be to a traditional or Roth IRA, 401(k), 403(b) or governmental 457(b) plan. It is also possible to qualify for a transfer to a Federal Thrift Savings Plan.

There are limitations on the Saver's Credit. A rollover contribution, such as a transfer from one IRA account to a new one, does not qualify. There may also be some reductions if you have taken a distribution this year from a qualified retirement plan or ABLE account.

The married-couple limits for the three levels are a 50% credit for incomes up to $43,500, a 20% credit for those with added earnings up to $47,500 and a 10% credit for any additional earnings up to $73,000. The single individual may qualify for the 50% credit amount with earnings up to $21,750, a 20% credit for additional earnings up to $23,750 and a 10% credit for added earnings up to $36,500.

The Saver's Credit timing includes this year or a contribution prior to April 15, 2024. This is similar to the rules that allow an individual to set up an IRA for 2023 until the tax-return due date for 2024.

Additional information on the Saver's Credit is available in the instructions for IRS Form 8880, Credit for Qualified Retirement Savings Contributions.

The American Legion’s Planned Giving program is a way of establishing your legacy of support for the organization while providing for your current financial needs. Learn more about the process, and the variety of charitable programs you can benefit, at legion.org/plannedgiving. Clicking on “Learn more” will bring up an “E-newsletter” button, where you can sign up for regular information from Planned Giving.