The IRS’s $1,000 Saver’s Match Program is poised to transform retirement savings for millions of low- and middle-income earners. How will this change your future?
At a Glance
- The IRS seeks public comments on the Saver’s Match under the SECURE 2.0 Act.
- The program aims to promote retirement savings and financial security for low- to moderate-income Americans.
- Starting 2027, up to $1,000 annually will be matched from the Treasury for contributions up to $2,000.
- The new initiative will replace the current nonrefundable Saver’s Credit.
- Eligibility is income-dependent, with phase-outs starting at $35,500 for single filers and $71,000 for joint filers.
A New Era for Retirement Savings
The Department of the Treasury and the IRS have issued a notice requesting comments on the newly introduced $1,000 Saver’s Match Program. Under the SECURE 2.0 Act of 2022, this innovative initiative aims to promote enhanced retirement savings and improve financial security for low- to moderate-income Americans. The initiative stands to provide much-needed support by matching up to $1,000 in contributions annually, thereby offering greater motivation and resources for individuals to save for their future.
Saver’s Match contributions are intended to replace the existing nonrefundable Saver’s Credit. This change aims to enhance retirement preparedness among a broader section of the U.S. population. By switching the nonrefundable credit to a direct match, this program will ensure greater accessibility and practical benefits to individuals making an effort to secure their retirement future.
Have you heard about the #IRS Saver's Credit? It’s a benefit available to many retirement plan contributors whose adjusted gross income falls within certain limits. Take a moment to see if you qualify: https://t.co/k9Qa79uyJX pic.twitter.com/NvAFYIeCdd
— IRSnews (@IRSnews) August 30, 2024
Implementation Timeline and Details
Starting in 2027, individuals contributing up to $2,000 to a 401(k)-type plan or IRA can receive up to $1,000 annually from the Treasury. These contributions must be to a traditional, pre-tax account even if the original contributions were made to a Roth IRA. The Treasury and IRS have underscored that contributions must be designated to eligible accounts to qualify for the match.
Eligibility for the Saver’s Match will be income-dependent. For joint filers, contributions phase out at $71,000, while for single filers, the phase-out begins at $35,500. This structure is designed to ensure that the intended beneficiaries of the program receive the maximum benefits. The IRS requests comments on how best to oversee the implementation and determine eligibility, reflecting the introducers’ attention to executing this rollout effectively.
Ensuring Effective Implementation
The notice issued by the Treasury and IRS solicits public input on several administrative and logistical aspects of the Saver’s Match Program, including eligibility requirements, claiming processes, account designations, and dealing with early withdrawals among other considerations. This engagement aims to enhance the program from the outset by considering feedback from prospective beneficiaries and stakeholders.
“Saver’s Match contributions represent a new approach to promoting retirement savings and an important opportunity to improve the long-term financial security for millions of low- to moderate-income Americans,” the IRS and Treasury said.
The responses, requested by November 4, 2024, can be submitted through any number of formats: via www.regulations.gov or by mailing comments to the IRS. These inputs are crucial to ensuring that the Saver’s Match is inclusive and beneficial for all eligible participants. Beginning in 2025, the program will include automatic enrollment in new retirement plans and employer Roth account matches, among other enhancements.
