Guidance issued on upcoming Saver’s Match for retirement plan contributions

The IRS released Notice 2026-48, which provides initial guidance for employer-sponsored retirement plans on implementing the new Saver’s Match program. Starting on January 1, 2027, the Saver’s Match will largely replace the Saver’s Tax Credit, changing it from a credit that reduces taxes to a federal matching contribution (up to $1,000 per year) that is deposited into a retirement plan or individual retirement account (IRA). The IRS intends to propose regulations consistent with this guidance, after taking into account any comments submitted by the October 5, 2026 deadline.

Background

In general, certain individuals who contribute to IRAs, employer retirement plans such as 401(k) and 403(b) plans, and Achieving a Better Life Experience accounts (which apply to certain disabled people) currently receive a tax credit. The major problem with the credit has been that it is nonrefundable, meaning that it can only be used to reduce the taxpayer’s income tax liability, which is often not helpful to low-income workers.

Section 103 of the SECURE 2.0 Act changes this credit to a federal matching contribution that must be deposited into a taxpayer’s IRA or retirement plan. This Saver’s Match is in addition to any employer contribution. In other words, the match does not replace any of the employer’s contributions, such as matching or non-elective contributions.

Saver’s Match Q&A guidance

Below is an overview of some of the Q&As in Notice 2026-48 related to the Saver’s Match and employer retirement plans. IRAs are only addressed here to the extent they are relevant to Saver’s Match contributions to employer retirement plans.

• Plans that accept Saver’s Match (Q&A D-1): 401(k) plans, 403(b) plans and governmental 457(b) plans can receive the Saver’s Match directly from the Treasury Department
• Saver’s Match acceptance optional (Q&A I-2): Retirement plans are not required to accept Saver’s Match contributions
• Eligibility for Saver’s Match (Q&A B-1): In general, to be eligible for the Saver’s Match, individuals must be at least age 18 before the end of the taxable year for which they make “qualified retirement savings contributions” (see below) on which the claim for a Saver’s Match contribution is based. Anyone who is a student under Internal Revenue Code (IRC) section 152(f)(2) for the taxable year, an individual claimed as a dependent on another taxpayer’s tax return for the taxable year, or a nonresident alien who is not treated for such taxable year as a U.S. resident is not eligible.
• Qualified retirement savings contributions for purposes of determining Saver’s Match (Q&As B-2 and C-3): For employer retirement plans, the Saver’s Match is generally calculated based on an employee’s elective deferrals and certain after-tax contributions less certain rollovers, transfers and plan distributions
• Calculation of the match (Q&As C-1 and C-2): The match is calculated as 50% of the qualified retirement savings contributions up to $2,000 per individual (i.e., maximum match is $1,000). It phases out when modified adjusted gross income (MAGI) is between $41,000 and $71,000 for taxpayers filing a joint return; $20,500 to $35,500 for single taxpayers and those married filing separate; and $30,750 to $53,250 for head of household filers (the phaseout calculation represents a somewhat complex mathematical formula provided in Q&As B-3 and B-4)
• Claiming Saver’s Match (Q&A E-1): To claim a Saver’s Match for a taxable year, an eligible individual needs to: (1) file an income tax return; and (2) claim the Saver’s Match contribution on a separate Form 8880-A, “Saver’s Match for Qualified Retirement Savings Contributions”
• Directing payments to retirement plans (Q&A E-3): An individual who wants to direct a Saver’s Match contribution to a retirement plan would be able to choose that result on the eligible individual’s Form 8880-A. The IRS is considering three paths, outlined below, for transferring Saver’s Match contributions to retirement plans.^[1] Note, Treasury officials are likely to be only moving forward with the Registration Path:
  • Registration Path (indirect/conduit traditional IRA): The Registration Path would be available to plans that accept rollovers. These plans (or their recordkeepers) would provide registration information directly to the Treasury and IRS. Under the Registration Path, the Treasury would automatically establish a conduit traditional IRA for an individual, which would then immediately roll over the Saver’s Match contribution to the retirement plan that has registered with the Treasury and the IRS. Payments made through a rollover from a conduit IRA to a retirement plan would not be treated as contributions made directly from the Treasury Department.
  • Automatic Match Path (direct): The Automatic Match Path envisions retirement plans (or their recordkeepers) providing plan- and participant-level information to the Treasury and IRS and having the Saver’s Match contributions automatically paid directly to the retirement plan
  • Rollover Path (indirect/conduit traditional IRA): This method is like the Registration Path in that it uses a conduit traditional IRA; however, the main differences appear to be that the plan would not need to register with the Treasury and IRS and that the eligible individual would need to initiate a rollover of Saver’s Match contributions to their chosen retirement plan. Using identifying information provided by the IRS to an individual who in turn provides such information to their chosen retirement plan, the Treasury would pay the Saver’s Match contribution to a conduit traditional IRA established by Treasury, and the conduit traditional IRA would immediately roll over the Saver’s Match contribution to the individual’s retirement plan
• Tax treatment and plan compliance (Q&As A-2, G-1, I-4 and I-5): Saver’s Match contributions “are not includible in gross income” for the year of contribution. In addition, a Saver’s Match contribution received directly from the Treasury Department:
  • Is treated as an elective deferral for determining direct rollover eligibility, involuntary distribution limits, loan limits, application of the joint and survivor annuity rules, required minimum distributions and in-plan Roth rollover rules
  • Is not taken into account with respect to any elective deferral and catch-up limitations that apply to 401(k), 403(b) or governmental section 457(b) plans
  • Is disregarded for nondiscrimination, actual deferral percentage and top-heavy testing
  • Cannot be distributed on account of hardship or unforeseeable emergencies; however, “earnings attributable to Saver’s Match contributions are not subject to these hardship and unforeseeable emergency distribution restrictions”

Rollovers and trustee-to-trustee transfers to a retirement plan from a retirement savings vehicle (including trustee-to-trustee transfers from a conduit IRA) that has received Saver’s Match contributions directly from the Treasury Department are treated like any other rollover or trustee-to-trustee transfer. The special tax rules that apply to Saver’s Match contributions do not carry over to retirement plans that accept these rollovers and trustee-to trustee transfers.

Importantly, when a conduit IRA is used, plans avoid special reporting rules, hardship and unforeseeable emergency distribution restrictions, and complex recovery tax rules that apply when Saver’s Match contributions are received directly from the Treasury Department.

• Saver’s Match reporting (Q&A F-1): Although plans must report distributions of Saver’s Match contributions on Form 1099-R in the same manner as a distribution of other pre-tax contributions, no additional Form 1099-R reporting would be needed. The notice also states that retirement plans that receive Saver’s Match contributions directly from the Treasury must report on the Form 5500 the aggregate amount of Saver’s Match contributions received directly from the Treasury. This reporting would apparently not be required if the contribution were made via rollover from a conduit traditional IRA
• Plan amendments (Q&A I-7): A retirement plan must be amended to accept Saver’s Match contributions directly from the Treasury. The amendment would constitute a “discretionary” amendment; however, a retirement plan that already accepts rollovers from IRAs would not need to be amended to accept rollovers from conduit traditional IRAs
• Saver’s Match/anti-cutback guidance (Q&A I-8): A retirement plan that accepts Saver’s Match contributions directly from the Treasury may be amended prospectively to no longer accept Saver’s Match contributions with respect to qualified retirement savings contributions made after the effective date of the amendment. Such an amendment will not violate the IRC or ERISA anti-cutback rules
• SPD update/model notice (Q&A I-3): The Department of Labor has advised the IRS that language describing Saver’s Match contributions must be included in a Summary Plan Description (SPD) or a Summary of Material Modifications (SMM) for an ERISA-covered plan that accepts Saver’s Match contributions. In addition, the Q&A provides model safe harbor language about Saver’s Match contributions that can be used by an employer that decides to provide an annual notice regarding the Saver’s Match. Presumably, the model language can be adapted for use in an SPD or SMM

Going forward

While employer-sponsored retirement plans are not required to accept the Saver’s Match contribution, doing so may be an opportunity to help lower-income workers increase their retirement savings with the help of federal matching contributions. For that reason, a plan sponsor may want to consider:

• Whether it needs or wants to amend its plan to accept Saver’s Match contributions
• How to coordinate with its recordkeeper to ensure its systems can handle these types of matching contributions
• How to communicate the Saver’s Match benefits to participants

footnote

1. Q&A E-2 lists separate rules on methods for directing Saver’s Match contributions to IRAs. Return to article undo