I graduated last May. I then got a job. Although I contributed a qualifying amount to a retirement account, according to form 8880 I am not eligible for the saver's credit because I was a student.

I've googled around, but I can't seem to find any reasoning behind this exclusion. I'm assuming that the 5-month rule is designed to specifically catch people like me who graduated in May. Does anyone know why recent college grads aren't allowed to take the saver's credit? Where by "why" I mean, what the reasoning is behind the exclusion... "because it's the rules" is not a satisfactory answer.


This is only a guess, as tax laws do not normally come with official reasons behind the regulations.

First, students already have education credits available to them, and perhaps the lawmakers thought it would be excessive for a person to get both types of credits in the same year.

Second, the saver’s credit is really there to encourage low income workers to save for their retirement. The income thresholds are low enough that it is safe to say that they are not really intended for most college graduates. If you graduate in May, you might fall below the income threshold for this credit your first year working, but only because you worked part of the year, as your full annual salary likely puts you above the limit.

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