Tax Credit for Retirement Savings Contribution

Individuals who make contributions to certain retirement plans may be eligible to receive a tax credit of up to 50% of the amount of their contributions, dependent upon their income levels.  This attractive tax credit is claimed upon filing one's income tax return and is in addition to the current tax deferral or deduction received at the time of the contribution.  For individuals who make contributions on an after-tax Roth basis (and, thus, forego a current tax deferral), the tax credit provides an opportunity to enjoy a current tax benefit. 

The tax credit rates are 10%, 20%, and 50%, dependent upon an individual's Adjusted Gross Income ("AGI").  For 2011, the credit is available for "married joint" filers with AGI of $56,500 or less, and for "single" filers with AGI of $28,250 or less.  For 2012, the credit is available for "married joint" filers with AGI of $57,500 or less, and for "single" filers with AGI of $28,750 or less.

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