Skip to comments.Consider free cash from feds
Posted on 02/24/2014 2:15:42 AM PST by Cincinatus' Wife
If you have a modest income, you've probably been asking yourself how you will ever be able to find the money to start saving.
So here it is: Provided your income is low enough, the federal government will pay you to stash money away for your retirement giving you as much as $1,000.
The deal comes through what's known as the saver's credit. You can find it buried in the tax return you do each year, and if you use the free tax preparation software the government gives people with incomes below $58,000, locating the saver's credit will be fairly easy. The Free File software is available at IRS.gov.
I suggest using the software, because paper forms make finding and using the saver's credit more difficult than finding Waldo on a book page. Even finding the name in tax materials will be perplexing, because the government uses two other names for the saver's credit. On the 1040 form, look for Retirement Savings Contribution Credit, and, on Form 8880, look for Credit for Qualified Retirement Savings Contributions, said Catherine Collinson, president of Transamerica Center for Retirement Studies. You won't find the saver's credit on the 1040EZ form.
Hunting for this credit is worth the extra effort.
The saver's credit is available to individuals with incomes less than $29,500 and couples with incomes less than $59,000, and the benefit depends on your income. Go to http://1.usa.gov/1dkeGik. The typical credit is about $200 for couples and about $122 for individuals. To qualify, you have to save for retirement either through a 401(k) or similar retirement savings plan at work, or through a new or existing individual retirement account.
Although you might think saving is impossible given your bills, the found money may make it possible. Consider a nurse whom Texas certified public accountant and financial planner Jerry Love advised. With an income of almost $32,000, she would have thought the saver's credit was outside her reach. But Love had her put $2,500 into an IRA, where she will save for her retirement years from now on.
By reporting on her tax return that she was putting $2,500 into an IRA, she got a deduction that brought her income just below the $29,500 maximum allowed for the saver's credit. Immediately, that cut her taxes by $375. Then she got a saver's credit of $250.
In other words, the government gives her $625 to save for her future. So she can save a total of $2,500 for retirement but needs to come up with only $1,875 out of pocket.
When people don't have the full $2,500, or some lesser amount, available to deposit immediately in an IRA, they use tax filing deadlines to their advantage. They report on their taxes what they will deposit in an IRA, then file their taxes long before the April 15 deadline for IRA contributions. When the tax refund arrives, they use that money to fund their IRA fully just as they reported on their tax return by April 15.
You don't have to put $2,500 into an IRA. Even $50 would do at a brokerage firm such as Scottrade or Charles Schwab.
The nurse in Love's example put in $2,500 so she could get her income down to the level needed to get the saver's credit. If she retires in 40 years, the $1,875 she took out of her pocket, plus the money from the government, will end up giving her about $54,000 for retirement.
And if she stashed another $2,500 a year into the IRA for the next 40 years, she could end up with almost $700,000.
AFL-CIO Announces Commitment to Promote Large-Scale Infrastructure Investments ....."AFL-CIO President Richard Trumka said:
We at the AFL-CIO believe that together, with our partners in business and government, we can profitably invest at least $10 billion in workers capital over the next five years in public infrastructure projects to make America more competitive and energy-efficient.
AFT President Randi Weingarten and AFL-CIO Building and Construction Trades President Mark Ayers will announce the initiative at the Clinton Global Initiative meeting and describe the partnership with investors, the government and businesses.".....
Obama changes rhetoric to try to sell Congress on transportation spending (new bank)......."Its a little more surprising that the president would avoid the word infrastructure, especially since a key part of the presidents plan would be to spend $10 billion to create a national infrastructure bank.
Obama says the bank would leverage private and public capital and invest in a broad range of projects to improve the nations rapidly eroding transportation network.".....
The nation[U.S.] has over $2 trillion in infrastructure and social needs, and there is over $3 trillion in public sector pension funds, said Randi Weingarten, president of the American Federation of Teachers and the leader of a group of public sector unions in the A.F.L.-C.I.O. that is studying the issue. The question is, are there financially prudent ways to invest working mens and womens capital to create jobs and rebuild Americas infrastructure?
................A.F.L.-C.I.O. officials said they also hoped their plan would help persuade Congress to create a National Infrastructure Bank or a program similar to the expired Build America Bonds program, in which the federal government subsidized bonds issued by states and municipalities to finance bridges, airports or other infrastructure. While labor unions and many Democrats support such measures to create jobs, many Republicans oppose them because they will increase federal spending."......[end excerpt] Source
Dubbed MyRA, Obamas initiative is intended to allow workers who do not have access to other workplace savings plans to open an account overseen by the government that would invest in low-risk Treasury bonds. Its a relatively modest proposal, one that would be entirely voluntary for employers and employees and would only guarantee low returns to minimize risk. "
Dubbed MyRA, Obamas initiative is intended to allow workers who do not have access to other workplace savings plans to open an account overseen by the government that would invest in low-risk Treasury bonds. Its a relatively modest proposal, one that would be entirely voluntary for employers and employees and would only guarantee low returns to minimize risk.
EUROPE Considers Wholesale Savings Confiscation, Enforced Redistribution "......................The solution? "The Commission will ask the bloc's insurance watchdog in the second half of this year for advice on a possible draft law "to mobilize more personal pension savings for long-term financing", the document said."
Mobilize, once again, is a more palatable word than, say, confiscate.
And yet this is precisely what Europe is contemplating:
Banks have complained they are hindered from lending to the economy by post-crisis rules forcing them to hold much larger safety cushions of capital and liquidity.
The document said the "appropriateness" of the EU capital and liquidity rules for long-term financing will be reviewed over the next two years, a process likely to be scrutinized in the United States and elsewhere to head off any risk of EU banks gaining an unfair advantage.
But wait: there's more!"
Inspired by the recently introduced "no risk, guaranteed return" collectivized savings instrument in the US better known as MyRA, Europe will also complete a study by the end of this year on the feasibility of introducing an EU savings account, open to individuals whose funds could be pooled and invested in small companies.
Because when corporations refuse to invest money in Capex, who will invest? Why you, dear Europeans. Whether you like it or not.
But wait, there is still more!.........."
Political decisions to allocate capital, rather than financial-based decision making. Never has worked in the whole of human history, and never will.
Socialist never stop with other peoples money.
Until they run out.
We are almost to that point.
The benevolent government gives free money. Feel the love.
“In other words, the government gives her $625 to save for her future.”
I love how they’ve turned “not taking $625 of her own money” into a “gift” from the government.
This is inflation thrusted on taxpayers. Just like cash for clunkers abnormally kept car prices high for those impoverished by taxes.
Indeed. Socialism is turning government into a provider cult racketeering those not belonging to it or those turned out by the program.
666 mark of the beast is fascism
Thanks for IRS post........
“guaranteed” funds...Huh. Just like if I liked my health insurance, I could keep it. Hmm. Sure, I’ll sign up for that (Not!).
“Don’t look behind the curtain, there’s nothing to see, I am the great and powerful Ozbama!”
If its legal, take advantage of it! Only a fool leaves money on the table.
And if the IRS helps you finance your future retirement, its worth it because Social Security won’t be around forever.
Sometimes... that gift horse is really a gift horse!
What is the House number of the bill that authorized this spending of the taxpayers dollars?
Y’all had enough?
If its legal, take advantage of it! Only a fool leaves money on the table.
Only a fool participates knowing the dealer is using a stacked deck.
You know another game, let’s hear it.
And no, we will not win back the Senate, what else are you selling?
Do the recipients of this benevolent government largesse pay more in federal taxes than they receive in tax refunds and incentives? If not, then I am financing my own retirement and retirement for 49% of the U.S. population who do not pay taxes.
Beware of government gifts. Who is the fool?
I plan my deductions so that every year I am either getting or paying in the low to mid three figure range. So a tax refund isn't something that I either count on or look forward to, but a payment is something I don't dread all that much either.
Unfortunately, most of us are forced to participate at gunpoint.