Getting credit for your retirement savings

If you participate in your employer's retirement plan—such as a 401(k), 403(b), or 457(b) planin 2017 you may qualify for an annual IRS tax credit, just by saving for retirement. Depending on your individual circumstances, the Saver's Credit may help reduce your overall annual income tax.

How to qualify for the Saver's Credit

You qualify if you meet all of the following criteria:

  • You contribute to an employer-sponsored retirement plan (401(k), 403(b), 457) or to an IRA (Roth or Traditional)
  • You are 18 years of age or older
  • You were not a full-time student during the calendar year
  • You are not claimed as a dependent on another person's income tax return
  • Your income falls within these limits in 2013 established by the IRS

The amount of the Saver's Credit

The Saver's Credit is a dollar-for-dollar reduction in income tax. The amount of the saver's credit you can qualify for is based on the retirement plan contributions you make and your credit rate. The credit rate ranges from 10% to 50%, depending on adjusted gross income and filing status. In 2017, the maximum credit is $2,000, or $4,000 if filing jointly. Qualifying participants with the lowest income qualify for the highest saver's credit. This amount is subject to change in future years.

How to claim the Saver's Credit

Complete IRS Form 8880, "Credit For Qualifying Retirement Plan Contributions," and attach the completed form to your Form 1040 for tax filing purposes.

Other considerations

The credit is based on the amount you contributed to your qualified retirement plan during the year. Any distribution you received from your retirement plan must be subtracted from your contribution amount.1

For more information

For more information on the Saver's Credit, go to the IRS website at http://www.irs.gov and review IRS Publication 590, Individual Retirement Arrangements, Chapter 4, Retirement Savings Contributions Credit, and Form 8880. Publications and forms can be downloaded or ordered by calling 800-TAX-FORM (800-829-3676).

Contact your payroll or benefits office for information about your employer's retirement plan.

IMPORTANT NOTE: AXA believes that education is a key step toward addressing your financial goals, and we've designed this material to serve simply as an informational and educational resource. Accordingly, this discussion does not offer or constitute investment advice and makes no direct or indirect recommendation of any particular product or of the appropriateness of any particular investment-related option. Your needs, goals and circumstances are unique, and they require the individualized attention of your financial professional. But for now, take some time just to learn more.

1 This rule applies to distributions received in the two years before the year the credit is claimed, the year the credit is claimed, and the period after the end of the credit year but before the due date — including extensions — for filing the return for the credit year. Please see IRS Form 8880 for more detailed information.

Please be advised that this article is not intended as legal or tax advice. Accordingly, any advice provided in this article is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. Such advice was written to support the promotion or marketing of the transaction(s) or matter(s) addressed, and you should seek advice based on your particular circumstances from an independent tax advisor.

AXA Equitable Life Insurance Company (NY, NY). Distributors: AXA Advisors, LLC and AXA Distributors, LLC. AXA Equitable, AXA Advisors, and AXA Distributors are affiliated companies and do not provide tax or legal advice.

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