IRS releases guidance for Saver’s Match contributions

Reviewing IRS guidance on Saver’s Match contributions

The Internal Revenue Service (IRS) issued Notice 2026-48 last month, providing guidance on the new Saver’s Match beginning with contributions made in 2027. The Saver’s Match will allow low- and moderate-income workers to receive a retirement plan matching contribution from the federal government. 

Enacted as part of the SECURE 2.0 Act of 2022, the Saver’s Match replaces the Saver’s Credit and is designed to provide qualifying workers with retirement plan matching contributions. According to IRS Chief Executive Officer Frank J. Bisignano, the Saver’s Match means that “millions of low- and moderate-income Americans will have the opportunity to strengthen their retirement savings.” The Saver’s Match will go into effect in 2027, with the first Saver’s Match paid to plans in 2028.

As with any change in retirement-related regulations, you may have questions about the Saver’s Match and its implementation. So, we’ve rounded up answers to some commonly asked questions below — read on to learn more.

How does the Saver’s Match differ from the Saver’s Credit? 

The Saver’s Credit required workers to claim a nonrefundable credit on their tax return for contributions made to a retirement plan. That meant, however, that many workers with little or no federal income tax liability did not receive the full tax credit. The Saver’s Match, on the other hand, is not a tax credit. Instead, the federal government will make a matching contribution — called a Saver’s Match — to a qualifying worker’s eligible retirement account even if the worker does not have an income tax liability.

Who is eligible for the Saver’s Match? 

Generally speaking, low- or moderate- income workers who are least 18 years old are eligible for the Saver’s Match if they make qualified retirement savings contributions (described below) and have modified adjusted gross income (MAGI) that does not exceed certain thresholds (described below). However, the following individuals are not eligible to receive a Saver’s Match: (a) full-time students; (b) individuals claimed as a dependent on another person’s tax return; and (c) nonresident aliens.

What is a qualified retirement savings contribution? 

A Saver’s Match can be made based on a worker’s qualified retirement savings contributions made to a traditional IRA, Roth IRA, 401(k) plan, 403(b) plan, governmental 457(b) plan, SIMPLE IRA, or SEP-IRA.

What is the amount of the Saver’s Match? 

The Saver’s Match contributions are equal to up to 50% of the worker’s qualified retirement savings contributions (taking into account no more than $2,000 of the worker’s contributions in any year). Accordingly, the maximum Saver’s Match is $1,000 which can be phased out depending on the worker’s MAGI.

What are the income limits to receiving a Saver’s Match? 

A worker must have MAGI below the following maximum income limits (to be adjusted for inflation) for the year:

How does a worker request a Saver’s Match? 

A worker must file IRS Form 8880-A (not yet available) with their tax return. The IRS will calculate the Saver’s Match amount. If the Saver’s Match is less than $100, the worker can choose to receive the amount as a refundable tax credit rather than be paid to a retirement plan. 

How is the Saver’s Match paid to a retirement plan? 

The worker must notify the IRS of the retirement account that will receive the Saver’s Match. The federal government will then make the Saver’s Match directly to the recipient's retirement account. The Saver’s Match will not be taxable until distributed from the recipient account. Although the IRS has not finalized the logistics, the guidance released suggests possible alternatives on how the federal government might deposit the Saver’s Match to a recipient plan. Making sure the Saver’s Match is transmitted to the correct recipient plan is expected to be the biggest challenge to implementing a Saver’s Match feature. The IRS guidance provides the rules that apply when a plan receives a Saver’s Match that is later to be determined to be erroneous.

Do plans/IRAs need to accept a Saver’s Match? 

No. An IRA or employer-sponsored plan does not need to accept Saver’s Match contributions. An employer wanting to accept Saver’s Match contributions will need to amend its retirement plan accordingly.

Closing thoughts

While a $1,000 Saver’s Match deposited to a worker’s retirement account can provide a meaningful benefit over time, there are implementation hurdles that still must be addressed. These hurdles include the logistics of how the Saver’s Match will be deposited in the worker’s correct retirement account, how to correct a Saver’s Match that is erroneously made to the wrong account, as well as the recordkeeping challenges associated with this new type of contribution. Accordingly, you may want to exercise caution before deciding to implement a Saver’s Match feature in your company’s retirement plan.

If you have questions about the Saver’s Match, please contact your Union Bank Relationship Manager and we’ll be happy to talk it over with you.