Special IRS Program Offers Big Savings Boost: Are You Eligible?

Special IRS Program Offers Big Savings Boost: Are You Eligible?

The IRS is rolling out a groundbreaking $1,000 Saver’s Match Program to bolster retirement savings for low- and middle-income Americans.

At a Glance

  • The IRS introduces a matching contribution of up to $1,000 annually for retirement savings.
  • Program starts in 2027 and replaces the existing Saver’s Credit.
  • Designed to improve financial security for low- to moderate-income individuals.
  • Input from stakeholders requested by Nov. 4, 2024.

IRS Launches $1,000 Saver’s Match Program

The IRS, under the SECURE 2.0 Act of 2022, is introducing a new initiative to encourage retirement savings among low- and middle-income individuals. Starting in 2027, the government will provide a matching contribution of up to $1,000 for amounts saved in retirement accounts, which replaces the existing nonrefundable Saver’s Credit. This initiative aims to improve financial prudence and retirement readiness, benefitting many Americans by ensuring a more secure future.

On Sep. 5, 2023, the Department of the Treasury and IRS issued a notice seeking public input on aspects of the Saver’s Match contributions. Comments are invited on eligibility criteria, methods for claiming the match, account designation, and more practical considerations. This request underscores their commitment to making the program accessible and effective for participants.

Key Features of the Program

One of the distinctive elements of the Saver’s Match Program is that the matching contribution is paid directly by the Treasury to a 401(k)-type plan or a non-Roth IRA designated by the saver. This direct governmental support encourages more widespread participation among those who might not benefit from a nonrefundable tax credit. The existing Saver’s Credit will be replaced by this more accessible Saver’s Match, further enhancing retirement savings opportunities.

“Unlike the existing Saver’s Credit, a nonrefundable tax credit, the Saver’s Match contribution is paid by Treasury to a 401(k)-type plan or non-Roth IRA designated by an individual claiming the Saver’s Match contribution.”

Saver’s Match contributions are set to phase out completely at income levels of $71,000 for joint filers and $35,500 for single filers. This income-dependent model ensures that the assistance reaches those who need it most—low- to moderate-income Americans. Each year, these thresholds will be adjusted to keep pace with inflation, ensuring the program’s relevance and effectiveness.

Stakeholder Input Sought

The Treasury and IRS are actively seeking insights from stakeholders to refine the program’s implementation, from eligibility requirements to the completion process. Feedback is requested by Nov. 4, 2024, via www.regulations.gov or mailed directly to the IRS. This open call for comments showcases the government’s dedication to making the Saver’s Match as effective and streamlined as possible.

Additionally, the SECURE 2.0 Act includes several reforms beyond the Saver’s Match, such as automatic enrollment in new retirement plans starting in 2025 and the ability to roll unused 529 plan funds into Roth IRAs beginning in 2024. This comprehensive approach aims to fortify the financial security of a broader portion of the American population.

Sources

  1. Treasury and IRS request comments on issues related to Saver’s Match contributions
  1. IRS Saver’s Match Contribution
  1. IRS Seeks Feedback on Saver’s Match Under Secure 2.0
  1. IRS Plans To Boost Retirement Savings
  1. How to Qualify for the Retirement Saver’s Match