States have just one year to enact state-run programs for people who have no access to 401(k) plans at work–if they want to make sure all eligible savers are ready to participate when a new federal matching program starts.
Today, The Pew Charitable Trusts released a report and is hosting a webinar at 1 p.m. ET to discuss the upcoming “Saver’s Match.” The new federal program enabled by SECURE 2.0 will take effect in 2027 and will match retirement savings up to $1,000 for individuals making $35,500 a year or less, and $2,000 for couples making $71,000 per year or less.
But a big problem to overcome is that nearly 57 million private sector workers without access to a retirement plan at work may struggle to access this match. Pew notes that more than a dozen states have created state-facilitated automated savings programs, or “auto-IRAs,” to help close this savings gap and ensure their residents can take advantage of the federal program. Currently, 12 states have an auto-IRA program, with five more set to come online in the next few years.
Pew’s new survey shows that workers really want access to those programs—and their interest skyrockets when they hear about the Saver’s Match.
Among the survey’s key findings:
- More than four-fifths of Americans are interested in participating in an auto-IRA program, and those majorities expand when they learn about the Saver’s Match (interest in auto-IRAs overall rose from 84% to 94% when the match was explained).
- Even among those who initially said they were not interested, more than half (52%) said they might when they learned about the Saver’s Match.
- Nearly four in five respondents (79%) indicated they would increase their contributions under the Saver’s Match.
The high overall rates of increased participation likelihood (87%) and the intention to increase contributions (79%) imply that the Saver’s Match could be a powerful lever in addressing the retirement savings gap in the United States. The positive response was consistent across demographics, income levels, and industries, suggesting the Saver’s Match could help reduce racial and ethnic disparities in retirement savings access.
More than a million savers across those dozen states have already saved a total of $2 billion using those state auto-IRA programs. They give small business workers a chance to build wealth and save for retirement, and could save taxpayers billions of dollars in future spending on public assistance over time.
The Saver’s Match shows great promise and represents a major opportunity for American workers to save more for retirement. It is expected to be a boon for the tens of millions of workers who don’t get retirement benefits through their employer. Pew’s survey finds that the matching contributions would go a long way in incentivizing Americans to save—and states can and should follow suit by passing auto-IRA programs.
Obstacles to overcome
The Pew research points out in its conclusion that realizing the potential benefits of the Saver’s Match will require addressing several technical and operational barriers.
For example, most participants in state auto-IRAs are saving in Roth retirement accounts, which are recognized for determining eligibility for the federal match. But actual deposits cannot go into a Roth IRA—they must be deposited in a traditional IRA. This distinction creates a fundamental structural barrier: Roth accounts offer operational simplicity for state programs, but they inadvertently prevent participants from receiving the Saver’s Match benefit in that same account.
Additionally, many eligible auto-IRA participants face practical obstacles to claiming the federal match. Many may not have a federal tax liability and may not file federal tax returns, making them unable to claim the match even if they have saved money in an auto-IRA and would otherwise be eligible. And if the claiming process is complicated—if, for example, it requires an entirely new tax form—Pew points out that may further prevent eligible participants from receiving the match.
The report’s conclusion urges policymakers to ensure the Saver’s Match works as intended by focusing on five priorities:
• Automate eligibility using existing IRS data
• Make the claiming process simple and intuitive
• Create easy options for non-filers
• Build strong administrative systems to handle errors and protect eligibility
• Launch broad, accessible communications through government, employers, and state programs.
Check out the full report here: “Federal Saver’s Match, Coming in 2027, Could Boost Automated Retirement Savings Programs.”
SEE ALSO:
• Saver’s Match Could Add $2 Trillion in Retirement Wealth: Morningstar
• New Research Shines Light on Saver’s Match Potential