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posted Jun 4, 2019 8:14:35 PM

Does the School Employees Retirement System (SERS) qualify for the Retirement Savings Contribution Credit?

My daughter pays into the School Employees Retirement System (SERS).  She's been told it's a public pension fund.  Does this qualify for the Retirement Savings Contribution Credit?

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3 Replies
Level 7
Jun 4, 2019 8:14:37 PM

She likely has a 403(b) plan, which is an eligible plan for the retirement savings credit - "The Saver’s Credit can be taken for your contributions to a traditional or Roth IRA; your 401(k), SIMPLE IRA, SARSEP, 403(b), 501(c)(18) or governmental 457(b) plan; and your voluntary after-tax employee contributions to your qualified retirement and 403(b) plans."

But, if they are really 414(h) contributions, then those are deemed as employer contributions and are not qualified for the credit.  The term public pension fund could encompass a variety of plans so she will need to find more specific information, but there should be some guidance on this on her Form W2.  Section 414(h) contributions are often listed separately in box 14 labeled as such.  And, 403(b) contributions would often appear in box 12.  

The amount of the credit is based on filing status and your adjusted gross income.  You can find more information about the specific levels at this link.  See Retirement Savings Contribution Credit (Saver’s Credit)

Level 2
Apr 14, 2020 7:59:37 PM

In my experience, contributions to PSERS are neither voluntary nor after tax. Other respondents' answers therefore seem to rule these out as contributions to a qualified plan for Retirement Savings Contribution Credit purposes. Moderators, correct me if I'm wrong. Thank you.

Level 2
Apr 14, 2020 8:09:24 PM

https://www.irs.gov/pub/irs-pdf/p590a.pdf

 

They also include voluntary after-tax employee contributions to a tax-qualified retirement plan or section 403(b) annuity. For purposes of the credit, an employee contribution will be voluntary as long as it isn’t required as a condition of employment.

IRS Publication 590-A p.47

 

Employee contributions to my state's school employee retirement system (pension) are pre-tax and compulsory. Therefore, it does not appear to be a qualified plan. Getting a tax credit on pre-tax contributions is considered to be double dipping (i.e. two tax breaks on the same money) and is not allowed.