Respuesta :
Javier (25) will file under the solitary status in 2021. He has a $25,000 modified adjusted gross income. He contributed $2,000 to his company's 401(k) plan during the year. He has never withdrawn money from a pension plan. Javier doesn't attend school. His retirement savings contribution credit (saver's credit) can only be worth up to:
$1,000. The justification is provided below.
What calculation supports the answer given above?
According to the Internal Revenue Service's 2021 Saver's Charge Rate Guideline, a single person with an Adjusted Gross Income (AGI) of between $21,501 and $33,000 will receive a savers credit rate equal to 10% of their contribution.
Hence,
Javier's 10% contribution will consist of:
10% x 2,000
= $200
It should be noted that rollover gifts are not eligible for the credit. Additionally, any recent distributions from an ABLE account, an IRA, or a retirement plan may reduce the amount of your qualifying contributions.
The maximum credit is $1,000 ($2,000 if married filing jointly), with the greatest creditable contribution being $2,000 ($4,000 if married filing jointly).
Learn more about Saver's Credit here:
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