New Saver’s Match, New Plan Sponsor Decisions

Seyfarth Synopsis: Section 103 of the SECURE Act 2.0 replaces the Saver’s Credit with a new matching contribution from the federal government. Since the enactment of SECURE 2.0, there have been a number of questions about the implementation of this new matching contribution, and how it will operate. In IRS Notice 2026-48 (“Notice”), the Treasury Department and IRS announced that they intend to propose regulations and other guidance regarding the Saver’s Match program. The Notice does not establish proposed or final regulations. Rather, it outlines the government’s current views on how it expects the Saver’s Match program to work and previews issues that Treasury and the IRS anticipate addressing in future guidance.

What is the Saver’s Match?

Beginning in 2027, the Saver’s Match will replace the federal Saver’s Credit. By way of background, the Saver’s Credit is an income tax credit of up to $1,000 ($2,000 if married filing jointly) that reduces a taxpayer’s federal income tax liability.

Instead of providing a tax credit, the Saver’s Match is a contribution to an employer’s qualified retirement plan or an IRA from the federal government of up to 50% of what the taxpayer contributes to the retirement plan or IRA, capped at a match of up to $1,000. The Saver’s Match rate is based on an individual’s tax filing status and modified adjusted gross income. For married individuals filing jointly, the match applies to each spouse. Certain individuals, such as those that are under age 18, are not eligible. After SECURE 2.0 was enacted, a number of open questions arose with respect to the Saver’s Match, primarily administrative questions and concerns. For example:

• Are employer-sponsored retirement plans required to accept these contributions?
• How will taxpayers “apply” for the Saver’s Match contribution?
• How will these Saver’s Match contributions be transmitted from Treasury to an employer-sponsored retirement plan?
• What do employer’s do with these contributions once they are in the plan? Do they have to be separately tracked?
• What withdrawal, distribution and reporting requirements apply to Saver’s Match contributions?
• Will recordkeeper/TPA platforms support these contributions?
• What if errors arise in the calculation and/or transmittal of the Saver’s Match? How are these issues corrected?

The Notice directly addresses several of the questions outlined above, while leaving room for additional guidance and regulations.

What does the Notice Say?

For plan sponsors, the key takeaway of the Notice is that qualified retirement plans are not required to accept Saver’s Match contributions, although it is encouraged. Plans that do accept these contributions will need to consider a range of plan document, recordkeeping, and administrative items before the first wave of Saver’s Match contributions are made in 2028. Employees whose plans do not accept Saver’s Match contributions may instead direct the federal contribution to another eligible retirement account, such as an IRA. 

The Notice also addresses the following with respect to the anticipated operation and administration of the Saver’s Match:

• Eligibility and Amount. The IRS will determine eligibility for the Saver’s Match and calculate the amount of the matching contribution. Neither the plan sponsor nor the plan administrator will be responsible for this.
• Claiming the Saver’s Match. Taxpayers will claim the Saver’s Match through their federal income tax returns using a new IRS form and will designate the retirement account that will receive the contribution. Plan Administrators and/or employers should not need to collect or verify information regarding an employee’s income, filing status, dependent status, student status, or other personal tax information as these relate to eligibility for the Saver’s Match.
• Transmittal of Saver’s Match Contributions. 
  • Treasury and IRS are working through the mechanics of how Saver’s Match contributions will be transmitted to employer-sponsored retirement plans. This has, perhaps, been one of the biggest challenges of the provision.
  • One approach being discussed is for Treasury to make these payments directly to recordkeepers/TPAs, for deposit in the employer-sponsored retirement plan account. Presumably, this will be addressed in future guidance.
• Plan Amendments.
  • Retirement plans that accept Saver’s Match contributions must be amended to provide that these contributions are allowed. Plans may impose reasonable conditions on the acceptance of Saver’s Match contributions, such as limiting acceptance to active participants or participants with existing account balances.
  • The Notice makes it clear that a plan may later be amended prospectively to no longer accept Saver’s Match contributions.
• Treatment of Saver’s Match Contributions. Saver’s Match contributions generally would be treated as plan contributions held under the plan and would be fully vested at all times.
• Tax Treatment. These contributions are generally not included in the participant’s gross income when contributed, but would be subject to income tax (and potentially the 10% early distribution penalty tax) when distributed.
• Limits and Nondiscrimination Testing. Saver’s Match contributions would not count toward the participant’s otherwise applicable contribution limits, including the limits under Code Sections 402(g), 415(c), and 414(v) and would generally not be subject to nondiscrimination testing. As a consequence, these contributions would need to be separately tracked.
• Account Administration. 
  • Because the Saver’s Match contributions would be maintained under the plan, they generally would be taken into account for purposes of plan administration in the same manner as other account balances.
  • For example, Saver’s Match contributions generally would be included in determining whether the participant’s account is subject to the small amount cashout limit and the participant’s vested account balance for purposes of applying the plan’s loan rules.
• In-Service Withdrawals and Distributions. Saver’s Match contributions would generally be available for distribution under the same rules that apply to employee contributions. However, Saver’s Match contributions would not be treated as amounts that may be distributed to a participant in the case of a hardship withdrawal in a section 401(k) or 403(b) plans, or an unforeseeable emergency distribution in a governmental section 457(b) plan (although earnings on these amounts could be distributed). This is another reason that these contributions would need to be separately tracked.

What Now?

Notice 2026-48 provides an indication of how Treasury and IRS currently expect the Saver’s Match program to operate and identifies a number of issues on which the agencies are seeking public input before issuing proposed regulations and other guidance.

While we are waiting for additional guidance and regulations, plan sponsors should use this time as an opportunity to begin evaluating whether accepting Saver’s Match contributions aligns with their goals and administrative capabilities. For those considering participation, early discussions with recordkeepers and other service providers may be warranted to assess whether Saver’s Match contributions can be received from Treasury, separately identified and tracked within participant accounts, and administered in accordance with applicable plan and tax reporting requirements.

We will continue to monitor new developments and will provide updates as additional information becomes available. Please contact your Seyfarth benefits attorney with any questions regarding this initial guidance.