The Scramble to Make the Saver’s Match Work

The Saver’s Match has been heralded by some researchers and retirement advocacy groups as a potential boon to low-income workers who have previously struggled to save in qualified retirement plans. The problem many see now is making sure it’s actually working by the 2027 start date.

“This has the opportunity to be huge,” says Kim Olson, a senior officer for retirement savings at the Pew Charitable Trusts, who is spearheading a project to help the Department of the Treasury and the IRS get the Saver’s Match up and running by 2027. 

According to research released in March by the Employee Benefit Research Institute, at least 21.9 million workers will qualify for the Saver’s Match, which was created by the SECURE 2.0 Act of 2022. The program will convert the Saver’s Credit, a tax credit for lower-income workers who contribute to a defined contribution plan or an individual retirement account, into a federal government match. The match has a maximum value of $1,000 at a rate of $0.50 per dollar contributed by a worker.

In a sign of policymakers interest in getting the program started, industry representatives from organizations including the Aspen Institute Financial Security Program, the Defined Contribution Institutional Investment Association, Vanguard, and Morningstar gave a briefing this week to Capital Hill staffers on the program.

The success of the Saver’s Match, according to Pew’s Olson, will come in large part from its simplicity, efficiency and awareness, goals that, after initial meetings about the program, she and her teams realized were not going to be as easy as they had thought. 

To that end, Olson and team convened about 30 people from think tanks and retirement plan providers to discuss how the program could move forward. From that meeting, several working groups were created to discuss and work on various aspects of the program. Those groups, which have been working for more than half a year, are looking at how to publicize the program, how to identify who qualifies for the match and how the Treasury and IRS will coordinate to get eligible participants the funds, in addition to other areas. 

Pew and the teams are awaiting a request for information from Treasury that will clarify “the parameters of what [Treasury is] looking to do” before the teams start sharing feedback and ideas.

The Treasury did not respond to requests for comment.

Significant Improvement

“It’s a significant policy improvement. But the implementation of it is going to face significant challenges, and there is concern about getting that done by 2027,” says Emerson Sprick, an economist and associate director of economic policy at the Bipartisan Policy Center.

The current Saver’s Credit, Sprick notes, was designed to incentivize low- and moderate-income earners to save in retirement plans. But problems with implementation have included the fact that low earners have “little to no federal income liability,” so a nonrefundable tax credit provides little incentive. In fact, the average credit was $191 in 2021, according to Sprick.

It has also faced a lack of awareness, as only 5.7% of taxpayers claimed the credit in 2021, Sprick says. That is despite a large part of the population being eligible for it, including married couples filing jointly with adjusted gross incomes up to $73,000, or a little less than half of what most households in America made in 2021.

“The Saver’s Match alleviates a lot of these problems,” Sprick says, because it’s “essentially a refundable tax credit that takes the form of matching funds in a qualified retirement account, rather than a check from the IRS.”

Many of the issues, he says, are about “the plumbing with recordkeepers,” who will need to sort out the logistics of receiving federal matching dollars on behalf of eligible participants. “There’s a world in which plan sponsors—at least some of them—don’t participate in the program. That throws up a huge barrier to savers who might want to claim the credit.”

Recordkeeper Engagement

Spencer Williams, founder, president and CEO of the Retirement Clearinghouse, warns that 2027 is “like yesterday” when it comes to the timing implementing the Saver’s Match. But, in what he sees as good news, his organization already has a system in place that could help with some of the “plumbing” issues by connecting recordkeepers.

The Portability Services Network, which went live in November 2023, has brought together six of the country’s largest recordkeepers to coordinate and enable the automatic transfer of participant savings when they leave jobs or providers but land at another recordkeeper within the network. Williams says that system, which has three recordkeepers already online, with the other three to come in 2025, already does several things that will be required to support the Saver’s Match.

First, it can identify and verify a participant within the recordkeeping network. Second, it can match the current account with the new account to which savings should be transferred. Third, it can digitally move money from the original source to the new plan.

“It’s fortuitous,” Williams says of the program. “We have built a utility that can be modestly tweaked so the U.S. Treasury can use similar technology to identify a taxpayer, select a dollar amount and get the money into their plan. … At the end of the day, you have to move the money to make it work.”

Williams says members of the Portability Services Network met with Treasury earlier this year to discuss the potential of using that infrastructure and, like Olson of Pew, the Portability Services Network will be watching closely for Treasury’s RFI, which he hopes they will see by early September.

“We will certainly respond to that because we have a very strong view how a portion of this thing could operate,” he says. “This is a monster implementation, but we think it’s doable … to get a big chunk of those eligible for the Saver’s Match to get the funds into a 401(k).”

Like others involved with making the Saver’s Match work, Williams said he hopes for a big public service campaign to make low-to-moderate-income earners aware of the program, something akin, he says, to the “Got Milk?” campaign of the 1990s.

Pew’s Olson, who worked on the initial OregonSaves state retirement program, also believes there will also be many people utilizing state retirement plan programs who will qualify for the match. One issue that could make it difficult for them to receive the match is that, under current policy, government dollars cannot go into a post-tax Roth savings account—the type of default account many state programs use. In these cases, she notes, users will likely need a second pre-tax individual retirement account, which may be opened by the provider, but the logistics of that setup are still unclear.

Despite such kinks, she says communicating about the program to eligible participants will be crucial; she hopes the IRS can put the program front and center for low-to-moderate earners when it comes to tax filing time. 

“This is the first time we’ve seen this amount of money being directed at this population,” Olson says. “This would be a sea change for millions of Americans.”

It would also, she believes, potentially relieve the burden for other social assistance program in the future, making the project not just important for beneficiaries, but for the U.S. retirement system as a whole.