PROPOSED LEGISLATION WOULD EXPAND THE SAVER'S CREDIT
Jul 15, 2010

Current law allows the "Saver's Credit" to provide qualifying, low income individuals a tax credit for the first $2,000 contributed to a retirement plan (with a $1,000 maximum for individuals and a $2,000 maximum for qualifying married couples.) However, currently this credit is nonrefundable, which means that many people who qualify don't actually realize any benefits because they don't have any tax liability.

In an effort to encourage more Americans to save for retirement, a proposal to expand the current legislation is being considered by Congress. The new legislation (if passed) is designed so that more people would actually see cash in their pocket. This would occur by lowering the maximum tax credit amounts to $500 for individuals and $1,000 for married couples, but would also increase the income thresholds for eligibility and make the credit fully refundable. This means more people would qualify, and even if the qualifying individual or married couple does not have a tax obligation, they would still receive a refund check.

This proposed legislation is tentatively planned to take effect in 2011.

This administation proposal has not yet been introduced or passed by Congress and could change during the legislative process. Many bills introduced do not become law.