A Tax Incentive for Retirement Savers

If you save in the Fund’s 403(b) Smart Account, you may be eligible for the saver’s credit

Tax season is here, and if you save in the YMCA Retirement Fund’s 403(b) Smart Account, you may be eligible to reduce your tax bill with the saver’s credit. The saver’s credit rewards taxpayers who are saving for retirement with a tax break.

The deadline to file 2019 taxes is Wednesday, April 15, 2020. If you are eligible for the saver’s credit, you can claim it using Form 8880, which can be found at www.irs.gov.

AM I ELIGIBLE?

You are eligible for the saver’s credit if you are age 18 or older, not a full-time student, and not claimed as a dependent on another person’s tax return. You are also eligible if you make tax-deferred contributions to the 403(b) Smart Account. Rollovers from an existing account do not apply.

You must also meet the following income requirements (adjusted gross income or “AGI”):

  • Single with AGI up to $32,000
  • Head of Household with AGI up to $48,000
  • Married Couple Filing Jointly with AGI up to $64,000
HOW MUCH CAN I CLAIM?

You can claim a tax credit worth 50%, 20%, or 10% of your 403(b) contribution amount, depending on your filing status and adjusted gross income. The credit is worth a maximum amount of $1,000 if you are a single filer and $2,000 if you are married filing jointly.

 

 Credit  Single
(AGI)
Head of
Household
(AGI)
Married Couple
Filing Jointly
(AGI)
 50% x Your
403(b)
Contribution
 $19,250 or less  $28,875 or less  $38,500 or less
 20% x Your
403(b)
Contribution
 $19,251–$20,750  $28,876–$31,125  $38,501–$41,500
 10% x Your
403(b)
Contribution
 $20,751–$32,000  $31,126–$48,000  $41,501–$64,000

 

Here is an example:

Adam files his taxes as a single filer. He contributed $1,000 in the Fund’s 403(b) Smart Account in 2019. His adjusted gross income is $20,000. With the saver’s credit, Adam is eligible to claim a 20% credit on his contributions. His total tax credit is worth $200.

A TAX SAVINGS OPPORTUNITY

If you did not contribute to the Fund’s 403(b) Smart Account in 2019, start saving this year to claim the saver’s credit on your 2020 tax return! Open a 403(b) Smart Account with the Fund by filling out this form and submitting it to your Human Resources Department.