Human Resources
Retirement Investors' Club (RIC) 403b Program
Tax Benefits
Pretax contributions and investment earnings are not taxed until you take income from the plan. This means that the IRS does not see your salary reductions as taxable income in the year you contribute. Distributions are taxed as ordinary income and reported on IRS form 1099R at the end of the tax year.
Your pretax contributions cost less to invest and the tax-deferred earnings add to your compounding power for growth over the long term.
Tax Credit
A nonrefundable tax credit known as the Retirement Savings Contribution Credit or Saver's Credit may be available to low and middle-income savers who make contributions to eligible retirement savings plans, such as a 403(b), 457(b) deferred compensation, 401(k) and IRA. The credit will be claimed on the individual's income tax return (see 2007 Form 8880), and will apply to the first $2,000 in savings contributions. The credit amount will be based upon the following adjusted gross income schedule:
2008 Adjusted Gross Income Schedule |
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| Joint Filers | Heads of Household | Others | Credit Rate |
| $0--$32,000 | $0 -- $24,000 | $0 -- $16,000 | 50% |
| $32,001 -- $34,500 | $24,001 -- $25,875 | $16,001 -- $17,250 | 20% |
| $34,501 -- $53,000 | $25,876 -- $39,750 | $17,251 -- $26,500 | 10% |
| $53,001 + | $39,751 + | $26,501 + | 0% |
The contribution amount upon which the credit is based may be reduced by any distribution amounts made from any plans....
- in the tax year in which the tax credit is applied
- in the 2 tax years preceding the year in which the tax credit is applied; or
- in the period after the tax year the tax credit is applied and before the individual's tax filing deadline for that year.
As under current law, contributions to eligible retirement savings plans will continue to be excludable from income. Please contact a tax professional for more information about this benefit