This may or may not apply to your situation, but...
tIRA contributions can also help knock your income down to a level where you would qualify for the Saver's Credit. At $40k and filing as Single, you would need to get below the $30,500 threshold to get any of the Saver's Credit in 2015.
http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Retirement-Topics-Retirement-Savings-Contributions-Credit-(Saver’s-Credit)
Are you serious? Why did no one ever tell me about this? That is crazy! So let me get this straight...if you max out your 401K and IRA(s) to the point that you are below $18,250 taxable/AGI for the year, then the government gives you 50% of what you put in as a credit?! Dang!
So in order to do that, I would have to take my $40K and let's say I max out the 401K, HSA and put some money in either a Roth or tIRA, all to the tune of at least $21,750. And so if did that, this Saver's Credit would give me back half, $10,875? Whoa!
Found this chart online just now...
2015 Saver's Credit
Credit Rate Married Filing Jointly Head of Household All Other Filers*
50% of your contribution AGI not more than $36,500 AGI not more than $27,375 AGI not more than $18,250
20% of your contribution $36,501 - $39,500 $27,376 - $29,625 $18,251 - $19,750
10% of your contribution $39,501 - $61,000 $29,626 - $45,750 $19,751 - $30,500
0% of your contribution more than $61,000 more than $45,750 more than $30,500
Retirement savings eligible for the 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.
Rollover contributions (money that you moved from another retirement plan or IRA) aren’t eligible for the Saver’s Credit. Also, your eligible contributions may be reduced by any recent distributions you received from a retirement plan or IRA.
And I'm not too clear on what a tax credit really is, since I'm a single worker and pretty much don't get any. Is it like,
whatever the credit is, your taxable income is reduced by that much? Or do you get that amount as a cash refund?And the other question is...if I fund a tIRA rather than a Roth and I take this Saver's Credit, does that prevent me from taking a deduction on the contribution? Or on the other tax advantaged accounts, for that matter??