Saver’s Credit: A Tax Credit for Retirement Savers
Everyone knows that saving for retirement is a good thing, and everyone should do it. But for many of us, it’s like exercising and eating right. To actually do it takes more than just knowing it, it takes a plan and a commitment.
What a lot of people don’t know, is that when you commit to a retirement savings plan, the government has created a tax savings incentive provided by the I.R.S. called the Saver’s Credit—when you save for your financial future you can also get rewarded right away, it’s the best kind of double savings whammy.
This is how important it is to save for your retirement. The federal government is giving money away to reward those that do, because retirement savings are not only the key to every individual’s financial future, but also vital to the overall long-term financial health of our country.
The Saver’s Credit can be worth thousands of dollars to some retirement savers depending on annual gross income. (See eligibility details here); and it’s more than a tax deduction, instead it is a credit that directly reduces what you have to pay the I.R.S. all just because you have a retirement savings account.
Unfortunately, according to AARP, nearly 1 million Maryland workers don’t have a retirement savings plan because there is not one available to them at their work. One of the main reasons for this is that for many small and medium-sized businesses the process of administering a plan has been cost prohibitive and an impossible administrative burden.
MarylandSaves was created as an easy and flexible solution that is compelling for both employers and their employees.
Launched in 2022, MarylandSaves is a state-sponsored retirement savings program that is free and easy for employers and completely flexible for employees, who can choose to increase, decrease or even pause their contributions completely. Additionally, the first $1,000 contributed to the account is available for withdrawal with no penalty to the saver for life’s unexpected expenses. MarylandSaves employee contributions go automatically from their paychecks into their own personal WorkLife Savings Accounts which are Roth IRAs and could be eligible for the Saver’s Credit.
With a MarylandSaves retirement savings account and a Saver’s Credit, tax season could be twice as much fun as it usually is from now on.
If you have a retirement savings account and want to learn more about your eligibility for the Saver’s Credit click here.