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QOTW: Saver's Credit

Recent research from Transamerica shows that not many plan sponsors promote the Saver’s credit to their employees so this week we asked our members if they do and for their thoughts on it. More than half of our members state that they do not promote the Saver’s Credit, a third are unaware of what it is, and only 15 percent of plan sponsors indicated that they currently provide education to employees about it.

For those that do not promote it, many indicated that its not applicable to their workforce because it is only for lowly paid employees. In fact, the credit only applies to individuals with an adjusted gross income (AGI) of 41,000 for married filing jointly employees, an AGI of $30,750 for head of household filers, and an AGI of $20,500 for other filers. If any of your workforce potentially falls into any of these categories, providing material on the saver’s credit may help encourage plan participation. A common comment from responses regarding the saver’s credit is that the income level limit is too low to be useful to many and that it should be indexed in some way to cost of living.

Comments from respondents include:

  • Didn't know about it but will check with our investment/education provider.
  • I will add this so our advisor talks with employees about this in the fall.
  • I will be adding this to my Benefit Orientation when I review the 401K Plan.
  • I would like to know more about it.  I've done a little research but not enough to promote it.
  • In my state, those who qualify for this credit are too "poor" to contribute to their retirement; perhaps the benchmarks should be adjusted so those low income people who do contribute, would qualify.
  • income level limits - vast majority of our employee are not eligible for this credit.
  • Its a really low income level to qualify for the credit.
  • Just looked up what Saver's Credit is. We are located just outside of Washington, DC and our lowest compensated employees earn too much to be eligible for this. These special incentives to save should be adjusted for those who live in high cost of living areas.
  • not familiar
  • Tax advice???
  • the income limits of the current credit - and the requirement that it be received only as an offset and that they use the long form make it extraordinarily difficult to communicate without engendering lots of followup questions.
  • We just started promoting it this year. We had not done so in the past because a different agency in the state promoted it.
  • The promotion is done via materials produced by our recordkeeper.  We don't do anything separately.
  • This credit is for low-income people, and it is not applicable for our employees.
  • We encourage employees to reach out to their tax professional to determine if they qualify and at what rate.
  • We give new hires a handout promoting the saver's credit.
  • We publish a note on the home page of our employee portal.
  • We send out a flyer at year end, but we don't make a big deal about it. We are considering targeting those in the appropriate salary ranges, however, this year.
  • We used to but we have shifted away to make room for other financial wellness topics that have broader reach.
  • When we used to hand out W-2s, we would hand out a flyer on Tax Savers credit.  Today with the majority of our W-2s being electronic, we push out a communication to all employees explaining the credit.