The Saver's Credit: A Tax Credit That Pays to Save for Retirement

The Saver’s Credit, also referred to as the Retirement Savings Contributions Credit by the IRS, is a tax credit above and beyond the tax-favored treatment of retirement accounts. 

The Saver’s Credit represents the first piece of major legislation focused on promoting tax-qualified retirement savings among low- to moderate-income workers. It was established with the enactment of the Economic Growth and Tax Reconciliation Relief Act of 2001 and made permanent in the Pension Protection Act of 2006, both laws resulting from bipartisan collaborations to improve retirement security. 

Twenty years after its establishment, the Saver’s Credit has enjoyed success, but it could be even more successful with ongoing promotion and the implementation of policy reforms for its expansion.

In early 2022, as policymakers actively engaged in continued bipartisan efforts focused on improving retirement security, Transamerica Center for Retirement Studies (TCRS) prepared this research report, The Saver's Credit: A Tax Credit That Pays to Save for Retirement, to share trends, insights, and recommendations for promoting, enhancing, and expanding the Saver’s Credit.

Coincident with this report's release, Catherine Collinson published an opinion editorial article in Bloomberg Tax calling on policymakers to raise awareness and implement reforms to expand the Saver's Credit.

Note: Subsequent to the publication of this report, The SECURE 2.0 Act of 2022 was enacted. The new law reimagines and replaces the Saver's Credit as a government matching contribution for eligible retirement savers beginning in 2027.