Nearly 22 million Americans could qualify for the Saver’s Match provision in SECURE 2.0, which will take effect in 2027.
A research report about the provision published today by the Employee Benefit Research Institute (EBRI) found that 21.9 million Americans could be eligible to receive a matching retirement plan contribution from the federal government starting in 2027.
“Since implementing the Saver’s Match provision will be a substantial undertaking, our research estimates the expected number of workers who would qualify for the match based on historical data and how many workers would be expected to receive these additional funds through the match,” said Craig Copeland, director, Wealth Benefits Research, EBRI. “This will provide important information on the scale and impact on the system for both those administering the accounts and the workers receiving the additional dollars.”
The SECURE 2.0 provision is focused on increasing the savings of lower-income workers by changing the current Saver’s Credit to a match, where the federal government will make a matching contribution to a qualified retirement plan of lower income workers. The match has a maximum value of $1,000 at a rate of $0.50 per dollar contributed by a worker, up to $2,000 annually. Scheduled to go into effect in 2027, the match would be directly added to the individual’s retirement plan after the worker applied for the match.
The report shows that among all tax filers, 83.8 million taxpayers had incomes that would have made them eligible for the Saver’s Match. However, some of these individuals did not have wage income, a requirement for contributing to a qualified retirement plan. From tabulations of tax filers with W-2 (wage) income, 69 million had incomes eligible for the Saver’s Match.
When examining the number who contributed to a plan, it was found that 18.9 million workers contributed to an employment-based retirement plan and had incomes that would qualify for the Saver’s Match. In addition, 1.0 million unique individuals contributed to a traditional individual retirement account (IRA) and 2.0 million unique individuals contributed to a Roth IRA. This makes up the total of 21.9 million individuals who contributed to a retirement plan that would likely be eligible.
“The report’s numbers on the Saver’s Match program are a good starting point for understanding its reach, and show that the bulk of the individuals who have historically contributed with the incomes prescribed in the law have contributed to employment-based plans and a sizable number contributed to Roth IRAs,” concluded Copeland.
To view a summary of the research report, “Sizing the Market for the Saver’s Match,” visithttps://www.ebri.org/publications/research-publications/issue-briefs/content/sizing-the-market-for-the-saver-s-match.
Most unaware of current Saver’s Credit
The EBRI report comes on the heels of another new study from the Transamerica Center for Retirement Studies finding that more than half of workers (53%) are unaware of the current IRS Saver’s Credit—and those most likely be eligible for it even less so (39%).
The Saver’s Credit is a non-refundable tax credit that may be applied up to the first $2,000 of voluntary contributions an eligible taxpayer makes to a 401(k), 403(b), or similar employer-sponsored retirement plan, a traditional or Roth IRA, or an ABLE (Achieving a Better Life Experience) account.
According to TCRS’ analysis of the most recently published IRS data, the average amount of the Saver’s Credit in 2021 was $191.
SEE ALSO:
• Most Workers Unaware of Saver’s Credit—and Especially Eligible Ones
• SECURE 2.0’s Saver’s Match: The Promise and The Challenges
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.