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  • Writer's pictureSamantha Diggs

Retirement Saver's Credit vs Match Explained

Updated: Mar 22, 2023

With the passing of SECURE Act 2.0, many changes are underway to help Americans save for retirement more easily. One such change is a new incentive for low to moderate income individuals that will transition a Saver’s Credit into a government match. To prepare for the official switch coming in 2027, let’s look at the differences between retirement Saver’s Credit vs Match and the benefits of this new legislation.




Retirement Saver’s Credit

Currently, qualified contributors to 401(k), traditional IRA, or Roth accounts can claim the Saver’s Tax Credit on their tax return. This retirement Saver’s Credit is nonrefundable, meaning it can’t be larger than the overall tax liability before the credit is applied; thus, the credit you receive could be reduced if your tax bill is too low. If you do meet the requirements as an individual filer, the credit amount is scaled to 10%, 20%, or 50% of the first $2,000 you contribute to retirement accounts.




Retirement Saver’s Match

Unlike its predecessor, the Saver’s Match implemented by SECURE Act 2.0 takes credit and directly deposits it into a retirement account as a matching contribution. This credit is given at a flat rate of 50% and may be put into any workplace retirement account or IRA. Additionally, this incentive is specifically geared to Americans who make moderate to lower income; therefore, to qualify for matching, wages must not exceed $35,000 for individuals, $53,250 for head of households, or $71,000 for married couples.



A Change for the Better

According to Shai Akabas, Director of Economic Policy at the Bipartisan Policy Center, “the major drawback with the version in law today [Saver’s Credit] is that it’s not refundable.” By using a matching contribution system for credit, this problem is circumvented and opens the doors for lower and moderate income individuals who couldn’t originally qualify because they didn’t have any federal income tax liability. Now, the American Retirement Association are saying the new legislation will make Saver’s Match available to over 108 million people.




Get Ready for Saver’s Match

Even though retirement Saver’s Match isn’t replacing the Saver’s Credit until 2027, there’s good reason to be excited. Millions of Americans will no longer be encumbered by tax credit claims, giving new availability to previously unequipped individuals and encouraging them to invest in the financial stability of their future.

By being prepared for this new approach to retirement saving, plan sponsors can hit the ground running and seamlessly integrate the new legislation into their retirement plan goals. We can assist you in developing a plan that meets your organization’s needs, an experienced and dedicated RPCSI team member can provide further details about the retirement Saver’s Credit to Saver’s Match as well as all the changes brought forth by SECURE Act 2.0. Learn more about our personalized plan consultation and how your organization can benefit from a tailored plan design.


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