Megan, The HR Director of one of our client companies called to discuss one of their low-income employees. She wanted to see if there was any way to maximize their benefits short of giving them a fat raise.
“Savers credit is a little-known and underutilized credit for lower-income employees,” I explained. “If your employee qualifies for the savers credit, the government will now match whatever you put into their retirement plan each year. That match will be 50% of the contribution you put into a retirement plan up to $2,000.
“In general, savers credit is available for tax payers who make below $30,750 or if married, below $41,000. If your employee is above that limit, they may still qualify for the savers credit but those amounts will be fully phased out if their income is over $53,250 for single or $71,000 filing a joint return.”
“I like this,” said Megan. “How does it work?”
“Well, it doesn’t work yet but it soon will. There are still many open questions regarding how the government will make the matching deposits and how frequently they will make them, but this provision is not effective until 2027 so the government still has some of time to answer them.”
“So for now…”
“For now I’ll keep my eyes on the ball for you; that’s what we do. As soon as I find options that work for you, I’ll give you a call.”
Want to offer your employees a retirement plan with the best benefits? Ask the professional retirement plan consultants at Concierge Retirement Services to help.