Beginning in 2027, the federal government will implement the Saver’s Match—a shift from a federal tax credit to a direct contribution into eligible workers’ retirement accounts. This change is designed to support low- and moderate-income savers and offers plan sponsors a valuable opportunity to enhance their retirement offerings.
How Saver’s Match works
Eligible participants can receive a federal match of up to $1,000 (50% of contributions up to $2,000) deposited directly into their retirement accounts—including employer-sponsored plans and IRAs. Participants claim the match through their tax return, and the Treasury handles the deposit.
- The Saver’s Match is not taxed when received, but upon withdrawal, like traditional retirement contributions.
- It is fully refundable, meaning eligible savers will receive the match even if they owe no federal income tax.
Key points for the SECURE 2.0 Saver’s Match
- Eligibility is based on income and filing status.
- Partial matching is available for single filers earning between $20,500 and $35,500, and joint filers earning between $41,000 and $71,000.
- These thresholds will be adjusted for inflation in 2028.
- Contributions are made by Treasury, not through payroll.
- First deposits are expected in early 2028, matching contributions made in 2027.
- The Saver’s Match is in addition to any employer contribution. It does not replace the employer’s match or non-elective contributions.
Operational considerations
While employer-sponsored plans are not required to accept the Saver’s Match contributions, agencies are exploring ways to reduce administrative burdens.
Additional guidance is expected on:
- Annual participant notices about plan participation in the Saver’s Match.
- Procedures for handling errors and returning incorrect contributions.
- Application of the recovery tax on early withdrawals and related reporting.
- Form 5500 reporting and plan amendment requirements.
Why Saver’s Match matters
According to the Employee Benefits Research Institute, approximately 69 million workers with W-2 income would have met the income eligibility criteria for the Saver’s Match based on historical IRS data. For plan sponsors, it’s an opportunity to:
- Increase engagement among lower-income employees.
- Boost retirement savings through federal contributions.
- Support financial wellness initiatives.
While Treasury’s technology solutions are expected to ease implementation, sponsors should begin preparing now:
- Decide whether to allow the plan to receive Saver’s Match contributions.
- Coordinate with recordkeepers to ensure systems can accept and track federal match deposits.
- Launch awareness campaigns to educate participants on eligibility and benefits.
- Promote retirement plan access through auto-enrollment or simplified participation requirements.
Next steps for plan sponsors
Stay tuned for further updates from Treasury. The Saver’s Match isn’t just another government program—it’s a potential game-changer for retirement security. For millions of workers struggling to save, this offers a substantial financial lifeline. With thoughtful preparation, plan sponsors can seamlessly integrate this initiative into their retirement offerings and make a lasting impact on employee financial wellness.
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