Saver's Tax Credit: Incentive to Save for Retirement Now

The Saver's Tax Credit was permanently enacted by the Pension Protection Act of 2006, but has been available sense 2002 under the economic growth and tax relief reconciliation act of 2001 (EGTRRA). This tax credit is an excellent opportunity for moderate-income households to save for retirement while lowering the amount of taxes they pay.

The Saver's Tax Credit not only assists moderate-income households to begin saving for retirement, but it also gives an incentive for recent graduates who are entering the work force to do so as well. Formally known as the "Retirement Savings Contributions Credit," the credit applies to the following qualifying contribution plans:

• 401(k) employer plans
• SIMPLE and SEP plans
• Government 457 plans
• Traditional and Roth IRAs

Those who wish to participate in the credit must fulfill the following qualifications:

• Eighteen years of age
• Cannot be counted as a dependent on another person's return
• Cannot be a full-time student
• Cannot have been a full-time student for five or more months of the year

As of 2010, the following income limitations and corresponding filing statuses for are credit are:

• Married filing jointly: Up to $55,000 annually
• Head of Household: Up to $41,625 annually
• Single, married filing separately, or qualifying widow(ers): Up to $27,750 annually

The rate given on the credit will depend on income-level and filing status, but range from 10% up to 50% and have a maximum contribution amount that can be applied to the credit of $2,000. This tax credit helps moderate-income households to save money on their taxes while still planning for the future. As this credit helps numerous households, it can be very beneficial to young adults who otherwise would not be saving for retirement. The cost of living throughout history has consistently increased and the majority of individuals begin saving for retirement too late in their lives. Those who are able to should take advantage of this great opportunity.

- Sara Hoy

Housing Bill Offers Help For Many

The housing bill recently signed by President Bush offers relief for many beyond those in danger of loosing heir homes to foreclosure. In addition to helping those hurt by falling real estate prices and adjustable rate mortgages Congress included breaks for first time homeowners, reverse mortgage borrowers, and jumbo loan mortgage holders.

First Time Homeowners - If you are buying a home for the first time you may be eligible for a federal tax credit of $7,500 or 10% of the purchase price whichever is lower. To qualify for the credit you must have modifies adjusted gross income of less than $75,000 for single filers, or $150,000 for married joint filers. For single filers the credit is reduced for modified adjusted gross income above $75,000 and disappears at $95,000, for joint filers the credit disappears for modified adjusted gross income above $170,000.

Reverse Mortgage Borrowers - The bill limits origination fees on reverse mortgages to 2% on loans up to $200,000 and then 1% on amounts beyond that up to a cap of $6,000. Congress also increased the maximum loan amounts for HUD issued loans.

Jumbo Mortgage Borrowers - Jumbo mortgages often cost more than conventional mortgages. By making permanent the increased lending limits for Fannie Mae and Freddie Mac you may be able to refinance a jumbo mortgage to a lower rate conventional mortgage for loans up to 115% of local median home price up to a $625,000 ceiling.