Lawmakers are doubling down on efforts to persuade low- and middle-income workers who contribute to retirement savings accounts to take advantage of the saver's tax credit.
Provisions tucked in the Securing a Strong Retirement Act of 2022, or SECURE 2.0, which passed overwhelmingly in the House in March, not only make the saver's credit more generous and widely available but also direct the secretary of the Treasury to come up with a plan to promote the incentive.
If the legislation passes, the Treasury secretary will have to provide Congress with a report summarizing the department's anticipated promotional efforts within 90 days of the bill's enactment. The legislation specifically asks for plans involving digital and print materials and their translation into the 10 most commonly spoken languages outside of English. The Senate is expected to introduce its own version of the bill later this year.
The added measure to promote the credit will help make a difference in raising awareness of the largely unknown credit, said Catherine Collinson, the Los Angeles-based CEO and president of Transamerica Institute, a non-profit private foundation that includes Transamerica Center for Retirement Studies.
"There's still relatively low awareness of the saver's credit out there, and concerningly, awareness is even lower among the demographic segments that are more likely to be eligible and benefit from the credit," Ms. Collinson said.
The saver's credit — known formally as the retirement savings contributions credit — allows low- and middle-income Americans contributing to workplace retirement plans or individual retirement accounts to claim a credit against the taxes they owe. The amount of the credit depends on their income, tax filing status and how much they set aside for their retirement.
Under the revised credit structure proposed in the legislation, a couple making $45,000 a year that contributes $2,000 to a retirement account would get a $1,000 credit, up from $200 currently.