Tax Saver's Credit

You may qualify for a tax credit - Up to $1,000.

If you make contributions to your employer's plan,* or an IRA, you may be eligible for a tax credit of up to $1,000. This credit, referred to as the "saver's credit," could reduce the federal income tax you pay dollar-for-dollar.

How it works.

The amount of the saver's credit you may receive is based on the contributions you make and your credit rate. If you qualify, the credit rate can be as low as 10% or as high as 50%, depending on your adjusted gross income - the lower your income, the higher the credit rate. The credit rate also depends on your filing status. See the table below.

The maximum contribution taken into account for an individual's credit is $2,000.
If you are married filing jointly, the maximum contribution taken into account for the credit is $2,000 each for you and your spouse.

Example

The following example assumes the participant contributed $2,000 and is in the 15% tax bracket.

$700 out-of-pocket cost = $2,000 contributions

      $2,000    contribution
      x    15%  tax rate
         $300    tax savings

      $2,000    contribution
       - $300    tax savings
      $1,700
     -$1,000    saver's credit
         $700    out-of-pocket cost

The credit is available to those who are:

• 18 or older
• Not full-time students
• Not claimed as a dependent on someone else's tax return, and, in 2010, have adjusted gross income (shown on your 2010 tax return) that does not exceed:
  • $55,500 if you are married filing jointly
  • $41,625 if you are a head of household with a qualifying person
  • $27,750 if you are single or married filing separately

If you receive taxable distributions

The annual contribution eligible for the credit may have to be reduced by any taxable distributions from a retirement plan or IRA that you or your spouse may receive during the:

• year you claim the credit
• two preceding years
• period after the year for which you claim the credit and before your tax return filing due date

A distribution from a Roth IRA that is not rolled over is taken into account for this reduction, even if the distribution is not taxable. After these reductions, the maximum annual contribution eligible for the credit per person is $2,000.

The amount of your saver's credit will not change the amount of your refundable tax credits. A refundable tax credit, such as the earned income credit or the refundable amount of your child tax credit, is an amount that you would receive as a refund even if you did not otherwise owe any taxes. The amount of your saver's credit in any year cannot exceed the amount of tax that you would otherwise pay (not counting any refundable credits or the adoption credit) in any year. If your tax liability is reduced to zero because of other nonrefundable credits, such as the Hope Scholarship Credit, then you will not be entitled to the saver's credit.

* For example, 401(k), 403(b), or governmental 457 plans.

This notice serves as only a summary of the tax credit provision. For more information on your retirement plan, please contact your Plan Administrator.

This information is written in connection with the promotion or marketing of the matter(s) addressed in this material. The information cannot be used or relied upon for the purpose of avoiding IRS penalties. These materials are not intended to provide tax, accounting or legal advice. As with all matters of a tax or legal nature, you should consult your own tax or legal counsel for advice.

Before investing, you should carefully consider the investment objectives, risks, charges and expenses of the mutual funds or The Hartford's group variable annuity products and funding agreements, and their underlying funds. For fund and product prospectuses and/or a disclosure document containing this and other information, contact your financial professional or visit our website. Read them carefully.

RPS 7394