savers credit

Available in one form or another since the mid-1970s, individual retirement arrangements (IRAs) are designed to enable employees and the self-employed to save for retirement. Contributions to traditional IRAs are often deductible, but distributions, usually after age 59½, are generally taxable. Though contributions to Roth IRAs are not deductible, qualified distributions, usually after age 59½, are tax-free. Those with traditional IRAs must begin receiving distributions by April 1 of the year following the year they turn 70½, but there is no similar requirement for Roth IRAs.

Most taxpayers with qualifying income are either eligible to set up a traditional or Roth IRA or add money to an existing account. To count for a 2016 tax return, contributions must be made by April 18, 2017. In addition, low- and moderate-income taxpayers making these contributions may also qualify for the saver’s credit when they complete their 2016 tax returns.

Generally, eligible taxpayers can contribute up to $5,500 to an IRA. For someone who was at least age 50 at the end of 2016, the limit is increased to $6,500. There’s no age limit for those contributing to a Roth IRA, but anyone who was at […]