The Saver's Match program, authorized by the 2022 Secure 2.0 retirement legislation, aims to assist income-eligible workers by offering a matching contribution of up to $1,000 for single filers and $2,000 for joint filers.
However, a significant limitation is that the match can only be deposited into a traditional IRA, not a Roth IRA, which poses challenges for many savers who are automatically enrolled in state-run programs that default to Roth IRAs. As of April 30, over 1.2 million accounts in these state programs held $3 billion in assets, highlighting the potential impact on a large number of workers.
Experts like Angela Antonelli from the Center for Retirement Initiatives and Ed Slott, an IRA expert, have pointed out the administrative complexities this creates, as workers may need to maintain two separate accounts to benefit from the Saver's Match.
The program is set to replace the saver's credit, which is nonrefundable and only reduces tax burdens, while the new match is designed to enhance retirement savings for those who lack employer-sponsored plans. With 53.7 million workers aged 18 to 65 lacking access to such plans, the Saver's Match represents a significant effort to improve retirement savings.
However, the requirement for a traditional IRA could lead to increased fees and administrative burdens for savers, prompting calls for potential regulatory adjustments to streamline the process