Should you still be saving for your retirement after you’re retired? Maybe, especially if you can take advantage of a tax credit called the “saver’s credit.”
About the Credit
To qualify, you have to be one of those energetic seniors who is still working, at least part-time. Then, if you stash up to $2,000 of your earnings in an individual retirement account or an employer’s retirement plan (401(k), 403(b), 457, SIMPLE, or salary reduction SEP), the IRS may pay you back for your trouble by way of a tax credit — a dollar-for-dollar reduction of the amount of tax you owe. The table shows the credit rates and the income ranges that qualify for 2017.
|Credit Rate||Joint Filter AGI||Head of Household AGI||Single/Other AGI|
|0%||Over $62,000||Over $46,500||Over $31,000|
Besides the credit, how else might you benefit from this strategy? For one, any investment earnings would compound tax deferred in your account. Second, your contribution to an employer’s plan or a deductible IRA would lower your taxable income. Note, however, that you can’t contribute to a traditional IRA after age 70½. That restriction doesn’t apply to a Roth IRA. With a Roth, your withdrawals would be tax free after five years. Another plus: There are no rules mandating when Roth money must be distributed to you.
Be sure to talk to a professional before taking action. Contact a Security National Bank Wealth Management financial professtion below.Back to Articles