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Uncle Sam Will Give You $2,000 to Save for Retirement

Photo by: Gage Skidmore

Unbeknownst to most people, Uncle Sam will pay you to save for retirement.

You read that correctly. The U.S. Government will literally give singles up to $1,000 and married couples up to $2,000 for saving for retirement. This lucrative payout is known as the "saver's credit," and it's not too late to collect before you file your 2013 taxes.

How the saver's credit works
The saver's credit is a refundable tax credit for low- and moderate-income singles and couples. It rewards savers with a credit equal to up to 50% of their retirement contributions in any given year.

However, there are a few qualifications based on income, age, and dependency status. Here are the criteria:

  • You must be 18 years or older
  • You cannot be claimed as a dependent
  • You cannot have been a full-time college student during the year

You must also fit within the income limits. The income limits are set to a maximum of $29,500 for singles in 2013, and $59,000 for married couples in 2013.

Breaking out the rewards
If you fit the requirements, your tax credit will vary based on your income level and your retirement contributions. The table below shows incomes for singles and couples, with the percentage of retirement contributions that will come back in the form of a tax credit:



Married Couples




























Source: 2013 IRS Form 8880

To see if you qualify, match your income level with your tax status (single, or married filing jointly) to find the percentage of retirement contributions you can receive from the saver's credit.

The maximum benefit is 50% of retirement contributions up to $2,000 for each person. Thus, singles can receive as much as $1,000 (50% of $2,000), and married couples can receive up to $2,000 (50% of $4,000).

The best part of the deal
What if you didn't save for retirement in 2013? No problem. You can still qualify if you make contributions to an individual retirement account by April 15, 2014, the cutoff for the 2013 tax year. Thus, it's possible for you to open an IRA, make a contribution before April 15th, and receive this lucrative tax credit even if you didn't make a single contribution in 2013.

In 2010, single taxpayers who qualified received an average of $122, while married couples received $204. Those on the lower-end of the income scale received significantly more.It's free money for the taking -- take it, and start saving for your future retirement. 

Is Uncle Sam about to claim 40% of your hard-earned assets? 
Thanks to a 2013 law called the "American Taxpayer Relief Act (ATRA)," he can... and WILL... if you aren't properly prepared.

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Protect my hard-earned wealth from Uncle Sam


Read/Post Comments (37) | Recommend This Article (60)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 02, 2014, at 1:11 PM, 1WFang wrote:

    "income limits are set to a maximum of $29,500 for singles in 2013"

    Is this AGI income or gross income? Need to know that.

  • Report this Comment On March 02, 2014, at 1:11 PM, mavrik0333 wrote:

    YOu didn't mention if you took had any distributions in the last two years from a retirement plan you may not qualify for this credit.

  • Report this Comment On March 02, 2014, at 1:14 PM, mavrik0333 wrote:

    I just did this and it is AGI.

  • Report this Comment On March 02, 2014, at 1:33 PM, TommyJ76 wrote:

    "Uncle Sam" gives me nothing. Whatever the government "gives" me is money it has already taken from me. It has no other source of revenue.

  • Report this Comment On March 02, 2014, at 1:41 PM, Usurped wrote:

    You got it Tommy....and I love how a picture of the White House is used rather than the building where this bill Must be passed in order to get a President to sign. Finally, how many Americans with these levels of income could be saving enough to take these taxes advantages...but wait, after 35.5k, you can't even get a 50% advantage under the statute.

  • Report this Comment On March 02, 2014, at 1:44 PM, drdadv wrote:

    Anti-Democratic Americans: Americans who are against government are against Democracy. Small government is anti-Democratic. Democracy is government of the people, by the people and for the people. All the people. Not just a privileged few, not just those who pay taxes, but all American citizens. Those are the facts. You may have a different opinion, but those are the facts. Anti-big government is anti-Democracy because the purpose of government is to do the things people can’t do by themselves, and three-hundred and seventy-five million people with the right to vote pay for and expect government to provide services. Russia is small government. China is small government. North Korea and Iran are small governments. Big government is public education, national defense, police, fire and disease control…interstate highways, bridges, dams, canals, waterways, and catastrophe relief…national security, national guard, armed forces, nationwide air control, electrical grids, pollution control and parks and recreation…a national banking system, social security, medicare, and now national health care reform. It took big government to give women the right to vote, all races the right to citizenship, the five day work week and vacations. Yes, big government is sometimes ineffective, suffers from waste and fraud, and is cumbersome. Business is also sometimes ineffective, suffers from waste, theft and fraud and then passes the cost on to the consumer. It is better to have a cumbersome government than to let profit decide who lives or dies. The Tea Party is small government, a me-only America, run by third-world thinking, where only the lucky few prosper. Government is not some hated, useless “they” in Washington. Democracy is you and I working together for the greater good of the nation as well as our selves. Anyone who hates big government is telling you they hate Democracy. Diogenes of California

  • Report this Comment On March 02, 2014, at 1:46 PM, CommieLibNot wrote:

    They forgot to mention one big qualification - you must be a Democrat. At the IRS, we discriminate against Republicans with pride - and even if we get caught, no one will care.

  • Report this Comment On March 02, 2014, at 2:03 PM, pbrepnwark wrote:

    I would be MUCH happier if Uncle Sam just returned everything that they have sucked out of me in the name of Social Security deductions and let me invest it myself! If I had those funds to work with, I'd be sitting pretty and not having to worry about my retirement! Washington D.C. is a den of thieves!

  • Report this Comment On March 02, 2014, at 2:18 PM, NKPMAN wrote:

    After they gave me a trip to Vietnam I learned my lesson the hard way. Anything the government gives is something someone else either paid for in full or will cost you dearly.

  • Report this Comment On March 02, 2014, at 2:20 PM, JudyR50 wrote:

    drdady said it perfectly. This country has always been one nation that looked out for all it's citizens. Everyone shared in the building of this great country and everyone shared in the benefits of a great Democracy.. Lately though, we seem to have these small factions who believe they and only they created the pie and no one else is entitled to have a piece. They seem to believe that it is alright to give tax credits to the wealthy and big corporations but begrudge a tax credit to someone on the other end of the bread line. Life is short people. You shouldn't waste it being angry and hating something bigger than you. We live in a great Democracy and if you don't think so then try living somewhere else.

  • Report this Comment On March 02, 2014, at 2:45 PM, banmate7 wrote:


    I'm all for government in some combination running, overseeing, regulating, & tuning the services you listed. To be sure, I utterly reject SS, the ACA, & myRA as government programs. I'm for a direct payer, subsidized health care system. But my specific objections in all these programs are different topic, which I won't bore you with.

    The salient discussion here is how much money from the tax payer is required to fund and run these services. It's also important to determine who pays and how much. I've been tracking this issue for some time & have some high level conclusions.

    Tax revenue should be 21% - 23% of GDP. Our current budget, which is $650 in deficit out of $3.7 trillion total, is actually 23% of GDP. If we want, we can immediately close the gap, create a surplus with optimizations, and pare down debt. It's a matter of political will.

    This means balancing tax raises with tax cuts. Nobody should be fleeced. Not even the super rich. Anything over 50% effective combined taxes is ludicrous. Moreover, everybody should have skin in the game, especially 47% of Americans paying only payroll taxes.

    Cliched as it sounds, we're in it together. And yes, big government going beyond these parameters is every bit as bad as private interests becoming over dominant. Like it or not, private and public organizations are components of self tuning neural network...a chicken & egg opposed to your inference that government comes 1st.

    Sorry, it isn't as simple as your partisan tainted diatribe comes off.

  • Report this Comment On March 02, 2014, at 2:47 PM, mspidge wrote:

    where is the money coming from?? remember when the government says it's going to help you...........WATCH OUT!!! LOOK WHAT'S HAPPENING TO OUR COUNTRY AS WE SPEAK, BECAUSE OF THIS CRETIN IN OUR WHITEHOUSE.

  • Report this Comment On March 02, 2014, at 2:49 PM, PEGformula wrote:

    When did this start? Anyone know? I use to contribute to an IRA and didn't get such a credit. Now how about if I owe the IRS nothing, will I be given a check in $1,000 or it is used only if you have WAGES? Anyone know of the particulars that the author of this story didn't go deep into?

    If I lose from the upward manipulated stock market I am not given money as if I gained which is unfair.

    With no taxes I owe would I be given $1,000, yes or no for making a $2,000 retirement contribution?

  • Report this Comment On March 02, 2014, at 2:51 PM, PEGformula wrote:

    The tax form is way too complicated and convoluted. From a mathematician's point of view it is utterly ridiculous. Why can't certain numbers be posted than all subtractions done at once? It's add this and that, subtract this then carry over, subtract this, add that, bla bla bla.

  • Report this Comment On March 02, 2014, at 3:38 PM, AaronRosenberg1 wrote:

    When did this become a refundable credit?

  • Report this Comment On March 02, 2014, at 4:19 PM, ispep wrote:

    The article is somewhat misleading. It is a pre-tax credit, meaning all it does is reduce your tax liability. Since your tax liability can't be reduced to any lower than zero, they aren't actually giving you anything. They just aren't taking as much from you.

  • Report this Comment On March 02, 2014, at 4:31 PM, fitness wrote:

    DRdavd- You are about as wrong as can be. First, you claim if a person is anti-big Government they are anti Democratic. We haven't been a Democracy in a long time. Every day the majority is having to give way to a minority group. Second, Look at what is happening today. We have 50% paying for the other 50%. We have our leader enforcing the Laws he likes and ignoring the Laws he doesn't like. He bypasses Congress who is trying to do what we elected them to do-fight the Socialistic practices of the Democrats. There isn't many that wants to help those that NEED help, but there are many that do not like the flood of people coming here illegally and getting on the Govt. dole. You claim the Tea Party is not for Democracy and you don't know what you are talking about. The Tea Party is for AMERICA.

  • Report this Comment On March 02, 2014, at 4:42 PM, JePonce wrote:

    Better take I while you can get it.

    The Chris Dodd "Consumer Financial Protection" committee is eyeing up your IRA, to "Manage" to protect you from yourself.

    So long as you are not one of the 600,000 seniors that lost most of their lifetime of retirement saving, because Congress refused to do its job.

    Bailout the bib banks, but not seniors.

    Government has such a wonderful record of money management.

    Look budget.

    This administration is more dangerous than all of radical Islam.

  • Report this Comment On March 02, 2014, at 4:51 PM, JePonce wrote:

    Dr Dad is a neo Marxist.

    In 2012, private sector business produced $4.5 trillion of our GDP, and the American worker produced $10.5 trillion.

    Local, state and federal government, using direct taxes, indirect taxes, fees, and fines, move $7 trillion from the private sector placing it in government treasuries some in the form of taxpayer debt. That is 52.08% of GDP.

    The governments left behind in the private sector 24.6% for Business, and 23.4% for the Workers.

    And the good Dr will tell you trickle down economy does not work. How can it when so much trickles up?

  • Report this Comment On March 02, 2014, at 4:54 PM, Mathman6577 wrote:

    I'd rather keep the $2k and invest it myself. Uncle Sam will muck it up.

  • Report this Comment On March 02, 2014, at 5:01 PM, PEGformula wrote:

    ISPEP, that is what I thought.

    Totally misleading.

    It's geared to help those who have more money.

    Being responsible and save is not a position that ever gets rewarded. All the incentives are really for those who are making good money already, especially the home-owner deduction---geared to help the wealthy while all the renters and lower wage earning home buyers are subsidizing the credit. Too bad no one in the media will mention this.

  • Report this Comment On March 02, 2014, at 5:20 PM, JePonce wrote:

    Obama certainly knows how to create and take care of the poor.

    Currently there are 9,984,000 citizens drawing unemployment, and 11,652,000 that used their benefits and have been dropped from the LABOR FORCE job count. That is 21,636,000 unemployed no matter how you slice it.

    He has added 28,233,000 to the food stamp program, 6,524,317 personal bankruptcies have been filed, 239,426 business bankruptcies have been filed, 428 U.S. banks have closed.

    He helps by cutting our National Defense spending -4.71%, or 20.71% inflation adjusted, while increasing welfare spending 42.5%, 58.5% inflation adjusted.

    Spends $548 billion paying benefits to 58 million social security retirees, while spending$1.1 trillion on retired government employee pensions.

    After discounting our GDP by the manna from heaven Quantitative Easing, results in a Zero growth GDP.

    Neo Marxism at its best.

    Sources: Obama White House Budget, Department of Labor, Bureau of Statistic Employment Report, Department of Agriculture Food Stamp Report, U.S. Bankruptcy Court records, Social Security Department Reports

  • Report this Comment On March 02, 2014, at 5:26 PM, ryanchandler25 wrote:

    As a tax accountant, this article is a bit misleading in many respects. All Fool articles are designed to get you to buy their newsletters.

  • Report this Comment On March 02, 2014, at 5:57 PM, JePonce wrote:

    Shall we talk Debt?

    When Obama took office our National Taxpayer Debt was $10,699,804,864,612. As of today our National Taxpayer Debt is $17,426,891,482,702.

    That is an increase of 62.87%.

    The Census Bureau reports there are 88,000,000 married and single head of households,

    That equates to $198,033 debt for every American household.

    But alas, that does not include another $3 trillion in local and state debt.

    We are in economic servitude to the Dark Prince and his Neo Marxist Democrats, and are approaching economic slavery.

    But never fear, the Messiah is leading us to Utopia.

    I must stop! I hear the Dark prince singing. I must follow like the rats to the Pied Piper.

    Sources: U.S. Treasury, U.S. Census Bureau.


  • Report this Comment On March 02, 2014, at 6:09 PM, JePonce wrote:

    There is a boy living in my basement, who graduated pre-med with high honors. The best job he could find is working in a state school as a Para Professional teaching fundamentals to severely mentally handicap student for 30 hours a week, The school fully admits his hours are limited to avoid the cost of health insurance. He has purchased health insurance, has school loan debt held by Obama at 6.8%, and a cell phone. Those 3 bills take half of his monthly earnings.

    I pay the balance of his expense, but cannot declare him as a deduction as his earnings exceeds the $3,900 threshold to qualify as a dependent.

    I am retired and on a fixed income.

    Obama and the Neo Marxist Democrats love the elderly and love the children.

  • Report this Comment On March 02, 2014, at 9:16 PM, Blackfeather7 wrote:

    We have a predatory government which is completely in thrall to predatory capitalism. drdadv's defense of big government would be wonderful if it were what we actually have. The Libertarian view of the "Free Market" is equally naive.

    Obama and almost every one of our so called "Elected Officials" on both side of the aisle are working for the big banks, big oil, big pharm., big war and big Israel.

    Arguing about the difference between the Repugs and the Demoncrats is playing their game of deception. The american people need to realize that there is only one political party in this country with two branches, both by Mussolini's definition, "Fascist."

  • Report this Comment On March 02, 2014, at 9:17 PM, Blackfeather7 wrote:

    Stop bickering and get out the torches and pitchforks.

  • Report this Comment On March 02, 2014, at 9:35 PM, Arill wrote:

    As some previous posters have suggested, unless something very recently changed, its NOT refundable.

    When you do the math, you find getting the $1000 for single or $2000 for married is rare since those folks rarely pay that much in taxes to get the higher credit limit.

    I'm semi-retired and been doing this for a few years, Usually get the $400 credit. This is a pretty dumb credit because most low income people this is targeted to don't have enough savings to make the retirement contribution in the 1st place, or don't pay taxes anyway, so it ends up helping middle class people like me instead of the poor.

  • Report this Comment On March 02, 2014, at 10:46 PM, rentaprogrammer wrote:

    Somebody needs to tell Turbotax about this. They sure didn't mention or factor in that credit on my return, which I paid $80 for.

  • Report this Comment On March 03, 2014, at 8:08 AM, Mathman6577 wrote:

    Taxes should not be the only consideration when making an investment. There are many other important aspects (a far more important one being staying ahead of inflation over the long run).

  • Report this Comment On March 03, 2014, at 10:12 AM, agbchief wrote:

    Not only do I NOT completely understand how this works, but does the government give you more money in your refund if you are due one? Do they require you to place the $ in an IRA? Why don't they JUST send singles the $ and marrieds their $ instead of having to jump through hoops? My wife and I want our $2K, since combined we are under $17,500 and I have and IRA with a total of $5 in it!

  • Report this Comment On March 03, 2014, at 10:15 AM, agbchief wrote:

    A famous man in history once stated this: "Give me liberty, or give me death!"

    I have completely revamped that concept to fit in American's budgets economically and financially in an updated 2014 version which goes like this: Give me liberty, and give me debt!

  • Report this Comment On March 03, 2014, at 8:51 PM, jasjfarrell wrote:

    I guess this money can be used to pay either the penalty for no obamacare or go towards premiums and deductibles for obamacare. Either way the government will get it back.

    It's another "feel good" non-existent give money to the people program.

  • Report this Comment On March 03, 2014, at 9:03 PM, zombieduck wrote:

    You don't get the full amount if your tax is less. I filed a joint 1040A return, and had put in $1,350 into my 401k. By earning over $34,500 I had to multiply that amount by .2, so I could only receive 20%, not the advertised 50% that they claim above. So, 20% of $1,350 works out to $270. I was hoping for half of what I contributed, up to the $4,000 max for married couples. Now, because my taxable income was reduced to $266 by the Standard Deduction and the Exemptions, my tax for 2013 was $26. So, even though I qualified for $270, I only received $26, because this is only meant to reduce, dollar for dollar, your tax liability after deductions and exemptions.

  • Report this Comment On March 03, 2014, at 9:07 PM, zombieduck wrote:

    Got to agree with Arill, this is a completely useless cridit. Because of my "higher" income, I only qualified for %20, not 50%, but because of my "higher" income, so much of my $34,966 was wiped out by standard deductions and exemptions, that my tax was only $26. So my credit was only $26. Stupid.

  • Report this Comment On March 08, 2014, at 2:50 AM, cluemore wrote:

    Let me get this straight: You fund a matching amount to your employer's 401K, pre-tax, and double your money immediately. Then you have enough exemptions and deductions to have little or no tax, so this credit reduces any tax you would have had to zero. That already puts you into the 47% group that Pay No Income Taxes! If you had put that money into a Roth IRA it would have grown tax free forever, without paying any tax on it now.

    Getting more money back from the government than your withholding is called welfare. (See Earned Income Credit).

  • Report this Comment On March 11, 2014, at 10:41 AM, eltabor wrote:


    You sound like one of those hating tea bagger;s. All of you possible haters would serve yourselves well to view the Christmas Carol and Frank Capra films until you get it and understand that Mankind is our Business. Anybody not Native American is here illegally and all we have to do is fingerprint in case of criminal activity and give them a SSN. Our stifling laws are not allowing immigrants to contribute their share.

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