Up to $1,000 in New Retirement Matching Funds Could Be Available to Millions Starting in 2027

For many lower- and middle-income Americans, retirement savings often get pushed aside by day-to-day costs. A new federal change could help small contributions stretch much further.

The program is set to begin in 2027 and offers a matching benefit, though workers must meet income and retirement-plan rules to qualify. Here is what to know about the added boost to retirement savings.

How the Saver's Match works

Created under the SECURE 2.0 Act, the federal program gives eligible savers a match of up to 50% on the first $2,000 they contribute to qualifying retirement accounts. The maximum annual match is $1,000.

The benefit begins in 2027 and will be claimed when taxpayers file their federal returns for that year in 2028. The IRS says millions of low- and moderate-income Americans may be able to participate, although the final number who qualify and claim the match is still unknown.

Who can qualify?

Along with income limits, applicants must be U.S. residents for tax purposes, make qualifying retirement contributions, and be at least 18 years old by the end of the tax year. Full-time students for at least five months of the year and people claimed as dependents on someone else's return are not eligible.

The benefit is not limited to older Americans. While there is a minimum age requirement, there is no upper age cap, and the usual retirement contribution rules still apply.

Income limits for 2027

The program includes both a phaseout range for the full 50% match and a cutoff above which no match is available. The IRS will use Modified Adjusted Gross Income, or MAGI, which adds back certain amounts such as pretax retirement contributions.

The 2027 thresholds are:

• Married filing jointly or qualifying surviving spouse: $41,000 or less for the full 50% match; $41,001 to $70,999 for a reduced phased-out match; no match at $71,000 or above.
• Head of household: $30,750 or less for the full 50% match; $30,751 to $53,249 for a reduced phased-out match; no match at $53,250 or above.
• Single or married filing separately: $20,500 or less for the full 50% match; $20,501 to $35,499 for a reduced phased-out match; no match at $35,500 or above.

These limits are expected to rise with inflation after 2027.

Which accounts qualify?

The IRS says qualifying retirement savings vehicles include traditional and Roth IRAs, 401(k) plans, 403(b) plans, and government 457(b) plans. Contributions to these accounts can count toward eligibility, but the account itself may not always be able to receive the federal match.

Roth contributions count toward the rules for eligibility, but the federal match must be deposited into an eligible non-Roth account that accepts Saver's Match funds. The IRS is also weighing a possible intermediary traditional IRA option, though that has not been finalized.

Savers should confirm with their plan provider or IRA custodian whether the account can accept the match rather than assuming it can.

How the money is paid

The federal match generally goes into a retirement account rather than being sent to a checking account. If the match is more than zero but under $100, however, taxpayers may choose to receive it as a refundable income tax credit instead.

To receive the match, taxpayers must file Form 8880-A with their federal return for 2027 in 2028. The IRS will calculate the amount, if any, based on income and contributions. Early withdrawals of the match or other retirement funds before age 59.5 may trigger taxes and other penalties.

Saver's Match vs. Saver's Credit

The new program should not be confused with the existing Saver's Credit, which lowers tax liability based on retirement contributions. That credit is not refundable, but it can still reduce a tax bill.

Like the Saver's Match, the Saver's Credit is income-based. The difference is that the new match adds money to a retirement account instead of simply reducing taxes owed. The Saver's Match will replace the Saver's Credit for eligible retirement contributions beginning in 2027, while the Saver's Credit will remain available for qualifying ABLE account contributions.

Bottom line

Eligible savers could receive as much as $1,000 per person in matching funds starting in 2027. In most cases, that money will go into a retirement account rather than arrive as a payment.

The IRS says even modest annual contributions of $240 can grow significantly with the match. Savers who receive the full 50% match could end up with as much as $4,700 in an account after 10 years, assuming a 6% annual return. It may not cover retirement on its own, but it could be enough to encourage people to start saving.