Retirement Blog

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Consider this a retirement planning public service announcement: Don't forget to claim your saver's credit.

You've got lots of company if you don't know what I'm talking about. The Internal Revenue Service's retirement savings contributions credit, known as the saver's credit, is available to more than 57 million households with incomes of $57,500 or less for the tax year 2012. But the Transamerica Center for Retirement Studies' annual retirement survey found that among those likely to be eligible for the saver's credit, less than 20 percent had heard of it. People who made too much money to claim it were actually slightly more likely to be aware of it.

The saver's credit rewards you for putting money in a Roth or tax-deferred retirement plan, including 401(k)s, individual retirement accounts, simplified employee pensions, 457(b)s and others. The maximum amount of the credit for single filers is $1,000 and $2,000 for married couples filing jointly. How much you get is linked to your earnings. Any single person earning up to $28,750 in 2012 or $29,500 in 2013 is eligible. A head of a household is limited to $43,125 in 2012 or $44,250 in 2013. Married couples filing a joint return can make $57,500 in 2012 or $59,000 in 2013.

If you file your own taxes, be sure you don't ignore the calculation. The saver's credit option isn't on the 1040EZ, so if you think you qualify for it, choose a different IRS form. Filling out a longer form might seem like more trouble, but as Department of Transportation says, "Small delay for a big improvement."

If you use a tax preparer, make sure that person doesn't ignore the saver's credit.

Also worth noting:

• If you or your spouse took a taxable distribution from your retirement account, it could reduce the size of the saver's credit available to you.
• The saver's credit is a "nonrefundable" credit. It can reduce the tax you owe to zero, but it won't provide you with a tax refund.