A major change coming in 2027 could boost the retirement savings of millions of lower- and middle-income Americans. The federal government will start matching 50% of retirement account contributions up to $2,000 per year through the new Saver’s Match program. This money injects funds directly into savers’ accounts rather than simply reducing tax bills. For qualifying individuals, the Saver’s Match presents a prime opportunity to amass meaningful savings. But, you may need to take steps now to ensure you fully capitalize on this retirement windfall.
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What Is the Saver’s Match?
Saver’s Match is a key provision of SECURE Act 2.0, which was signed into law at the end of 2022, updating a previous SECURE Act enacted in 2019. Starting in 2027, the Saver’s Match will provide a 50% match of up to $2,000 per year on contributions to many types of retirement plans, including 401(k)s, 403(b)s, SIMPLE IRAs, and traditional IRAs.
Here’s what savers need to know about Saver’s Match:
The government will match 50% of your contributions up to $2,000 annually. In other words, contribute $2,000 to get the full $1,000 match. Contribute $500 to receive a $250 match.
The match won’t count toward your annual contribution limits. This means that even if you max out your 401(k), you can still get the full $1,000 match.
The federal government deposits the money directly into your retirement account. No need to claim it on your taxes.
Only pre-tax accounts such as traditional IRA and 401(k) accounts qualify. After-tax Roth accounts don’t get the match.
The Saver’s Match aims to incentivize saving among lower- and middle-class Americans. The currently available Saver’s Credit has the same objective, but as it turned out many who struggle to save benefit minimally from the credit. With matching funds going straight into retirement accounts, the impact of the match could be much more significant.
Who Qualifies for the Saver’s Match?
A means test decides who can get the Saver’s Match. Access to this federal retirement saving benefit phases out above certain income limits in order to target lower- and middle-income individuals. For the 2027 tax year, depending on your filing status, you must earn under the following thresholds to receive the maximum $1,000 match:
Single filers: $20,500
Joint filers: $41,000
Head of household: $30,750
If your income tops those amounts, the match gradually phases out until you hit the following limits, above which you can’t claim any match:
Single filers: $35,500
Joint filers: $71,000
Head of household: $53,250
The thresholds will continue to adjust annually for inflation. That means in later years, you may qualify for a partial match even if exceeding the 2027 limits.
Strategies to Maximize the Saver’s Match
Although the Saver’s Match doesn’t come into effect for a few years, you can take steps now so you can fully capitalize on the availability of these extra retirement funds. Here are moves to consider:
Talk to your plan administrator: Ask your plan administrator whether your employer account will accept Saver’s Match deposits starting in 2027. Confirming proper setup will help you maximize this windfall.
Increase 401(k) contributions: Boosting your rate now will make it easier to max the $2,000 match later. Many retirement planners suggest saving 10-15% of your income, or more.
Open a traditional IRA: IRAs qualify for the match and you can open one of these even if your employer has no qualifying plan such as a 401(k).
Pay down debts: Reducing expenses now leaves more cash to divert to retirement accounts after 2027.
Trim your budget: Find areas to cut spending so you can allocate more to retirement savings when the time comes.
Automate saving and investing: Set up automatic contributions and employ target-date funds or robo-advisors to put saving and investing on autopilot.
Consider a Roth conversion: Roth accounts don’t get the match. Converting your traditional IRA to a Roth before 2027 could make sense, depending on your situation.
Other Retirement Savings Proposals from the Aspen Institute
Beyond the Saver’s Match, the Aspen Institute’s Retirement Savings Forum suggested additional reforms to help people save for retirement:
Personalize retirement plans: Research shows women and minorities consistently have lower 401(k) balances. Tailoring plans to different groups’ needs could improve outcomes.
Partner across sectors: The Aspen Institute advocates collaborating with housing, health and education leaders to address interconnected financial issues and strengthen the push for expanded retirement plan access.
Bottom Line
The Saver’s Match presents an unprecedented opportunity to grow your retirement savings. Now is the time to assess your budget, reduce expenses, and direct more money to retirement accounts so you can maximize this free money when available. If you qualify, the Saver’s Match could give your nest egg a big boost starting in 2027.
Retirement Planning Tips
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