The end of 2016 is coming, and you need to make contributions to your 401(k), IRA or other workplace retirement plan by December 31 for the contributions to count for 2016. You still have until April 15, 2017 to make contributions to an IRA for 2016.
Low- and moderate-income workers can also take advantage of the Retirement Savings Contribution credit, which rewards them for making contributions to IRAs, 401(k)s, and similar retirement plans. The maximum credit is $1,000 per taxpayer, though other deductions and credits will reduce the benefit.
With this credit, eligible taxpayers deduct retirement contributions from their Adjusted Gross Income, as usual. On top of that, they can deduct an additional percentage of their contribution, as outlined in this chart:
|
2016 Saver’s Credit |
|||
|
Credit Rate |
Married Filing Jointly |
Head of Household |
All Other Filers* |
|
50% of your contribution |
AGI not more than $37,000 |
AGI not more than $27,750 |
AGI not more than $18,500 |
|
20% of your contribution |
$37,001 – $40,000 |
$27,751 – $30,000 |
$18,501 – $20,000 |
|
10% of your contribution |
$40,001 – $61,500 |
$30,001 – $46,125 |
$20,001 – $30,750 |
|
0% of your contribution |
more than $61,500 |
more than $46,125 |
more than $30,750 |
*Single, married filing separately, or qualifying widow(er)
Though anyone over 18 can apply for the credit, full-time students and those claimed as dependents are not eligible.
Tip courtesy of IRS.gov[1]
Need help with your 401k or IRA accounts?
Schedule a complimentary financial review with us!
{{cta(‘d55738b2-141c-4f75-8c13-27fc947dd75e’)}}
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results. You cannot invest directly in an index. Consult your financial professional before making any investment decision. Investment advisory services are offered through SHP Wealth Management, LLC., a registered investment advisor. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors. These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of SHP Financial, and should not be construed as investment advice. Neither the named representative nor the named Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information. By clicking on these links, you will leave our server, as they are located on another server. We have not independently verified the information available through this link. The link is provided to you as a matter of interest. Please click on the links below to leave and proceed to the selected site.
[1] https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-savings-contributions-savers-credit
