What is The Savers Credit in TSP?

What is The Savers Credit in TSP?

 The Savers Credit, officially known as the Retirement Savings Contributions Credit, is a tax credit designed to encourage low- to moderate-income individuals to save for retirement. While it’s not specific to the Thrift Savings Plan (TSP), participants in the TSP may be eligible for this credit if they meet certain income requirements and contribute to their retirement accounts.

To qualify for the Savers Credit, individuals must be at least 18 years old, not be full-time students, and not be claimed as a dependent on someone else’s tax return. The credit amount can be up to 50%, 20%, or 10% of contributions made to retirement savings, depending on the taxpayer’s adjusted gross income (AGI).

This credit is particularly beneficial for TSP participants, as contributions to their TSP accounts can help them leverage this tax incentive, lowering their overall tax bill while boosting retirement savings. Be sure to consult the IRS guidelines or a tax professional to get detailed information on eligibility and how to claim the credit on your tax return.