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IRS gives out FREE money (as tax credit), if you save for your future retirement. It is named saver's credit.

To qualify for this FREE money, all you need is SAVE your own money for your OWN retirement through an employer-sponsored retirement plan or through an individual retirement arrangement (IRA). The amount of money you can get is based on the contributions you make and your credit rate. The credit rate depends on your income and filing status and it can be as high 50%.

The Savers Credit has been extended and made permanent by the
2006 Retiremant Act recently signed into law. The problem is that
any retirement benefits withdrawn by EITHER spouse on a joint return
will reduce or eliminate this credit. The total retirement benefits withdrawn
by BOTH spouses must be ADDED together and this TOTAL is entered
in BOTH columns on the form 8880 for husband AND wife. So generally if
EITHER spouse withdraws very much from their retirement, NO Savers
Credit will be allowed.

It make sense.. IRS is giving credit for the NET saving only (hence name saver's credit).

Otherwise, If somebody is saving in one account for credit and withdrawing in another one.. It could be a money machine.. Great..

[quote="supeheterdyne"]The Savers Credit has been extended and made permanent by the
2006 Retiremant Act recently signed into law. The problem is that
any retirement benefits withdrawn by EITHER spouse on a joint return
will reduce or eliminate this credit. The total retirement benefits withdrawn
by BOTH spouses must be ADDED together and this TOTAL is entered
in BOTH columns on the form 8880 for husband AND wife. So generally if
EITHER spouse withdraws very much from their retirement, NO Savers
Credit will be allowed.