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On August 7, 2026, IRS released a “Notice of Intent to Issue Regulations with Respect to Saver’s Match Contributions,” providing preliminary guidance with respect the new Saver’s Match contribution rules that, under SECURE 2.0, are effective for taxable years beginning after December 31, 2026.
The Notice provides a review of the SECURE 2.0 Saver’s Match rules and a description of how the IRS expects to implement them. The Notice also requests comments on certain key issues, most notably on “Implementing an eligible individual’s choice for Saver’s Match contributions to be directed to a chosen retirement plan,” with respect to which the Notice identifies three separate “paths” IRS is considering.
In this article, after some brief background, we focus on the IRS’s outline of how it envisions the Saver’s Match working for retirement plans.
Prior to 2027, the Tax Code provides for a nonrefundable tax credit for eligible individuals meeting certain income threshold requirements who make contributions to an eligible retirement plan. The amount of that credit is (up to) 50% of the first $2,000 of taxpayer contributions to a retirement plan, for a maximum of $1,000 per eligible individual. Compensation thresholds apply for eligibility.
SECURE 2.0 changes that pre-2027 “Saver’s Tax Credit” into an in-plan (or an “in-IRA”) matching contribution. The Notice summarizes the changes made by SECURE 2.0 as follows:
Saver’s Match contributions are amounts that are generally paid directly to an eligible individual’s applicable retirement savings vehicle, even if the individual has no income tax liability. In contrast, the [pre-2027] Saver’s Credit is a nonrefundable tax credit that cannot exceed the amount of an individual’s tax liability. … Also, there are differences in income thresholds for eligibility, differences in the way income changes affect Saver’s Match contributions and Saver’s Credit amounts, and other income calculation differences. … Finally, for taxable years beginning after December 31, 2026, Saver’s Match contributions would be claimed on a new (not yet published) Form 8880-A, Saver’s Match for Qualified Retirement Savings Contributions (or a successor form).
Other features of the new Saver’s Match include:
Rules for the return of “improper Saver’s Match” contributions.
Reduction of the Saver’s Match by aggregate distributions received from similar plans/IRAs in (or for) the current and two preceding tax years.
A “Saver’s Match recovery tax” where a taxpayer takes certain early distributions.
Obviously, the biggest logistical challenge presented by the new Saver’s Match regime is how matching contributions paid by the federal government are going to get into privately sponsored retirement plans. In the rest of this article, we’re going to summarize how the IRS sees that working.
Two preliminary matters: First, let’s note that this is just a Notice of Intent to Issue Regulations, and, indeed, the IRS hasn’t settled on one specific route for federal matching contributions to follow. With regard to the rules/alternatives addressed in the Notice, however, IRS states that it “expect[s] that … forthcoming proposed regulations will be consistent with the rules described in [the] notice.”
And, second, plans are not required to accept Saver’s Match contributions. IRS does, however, say that, “because Saver’s Match contributions represent a new approach to promoting retirement savings and an important opportunity to improve the long-term financial security for low- to moderate-income Americans, the Treasury Department and the IRS encourage retirement plans and IRAs to consider accepting such contributions.”
The Notice states that the IRS is “considering at least three paths for a Saver’s Match contribution to be directed to an eligible individual’s chosen retirement plan,” as follows:
The Registration Path would allow retirement plans that accept rollover contributions (or recordkeepers or service providers for those plans) to provide registration information directly to the Treasury Department and the IRS to facilitate payment of Saver’s Match contributions on behalf of an eligible individual. Under this Registration Path, the Treasury Department would automatically establish a conduit IRA for that individual, and the conduit IRA would then immediately roll over the Saver’s Match contribution to the retirement plan that has registered with the Treasury Department and the IRS. … Payments made through a rollover from a conduit IRA to a retirement plan under the Registration Path would not be treated as contributions made directly from the Treasury Department. … [T]his type of rollover would be treated like any other rollover and would not be subject to special Saver’s Match contribution rules.
The Automatic Match Path would allow retirement plans (or recordkeepers or service providers) to provide plan-level and participant-level information to the Treasury Department and the IRS to facilitate payment of Saver’s Match contributions on behalf of any eligible individual. This information could be similar to the information provided by retirement plans to implement existing auto-portability [money-follows-the-participant rules]. Under this Automatic Match Path, a Saver’s Match contribution would be automatically paid directly to the retirement plan that has provided the plan-level and participant-level information that facilitates a match between the eligible individual and the retirement plan.
The Rollover Path would allow the Treasury Department to establish a conduit IRA and the eligible individual to initiate a rollover of Saver’s Match contributions from the conduit IRA to a retirement plan chosen by the individual. Under this path, (1) the IRS would provide a Saver’s Match Confirmation Number to an individual who makes a claim for, and demonstrates eligibility for, a Saver’s Match contribution, (2) the individual would provide the IRS-provided Saver’s Match Confirmation Number to the individual’s chosen retirement plan, and (3) the chosen retirement plan would provide identifying information to the Treasury Department about the individual and the retirement plan. Then, based on that identifying information, the Treasury Department would pay the Saver’s Match contribution to a conduit IRA established by the Treasury Department, and the conduit IRA would immediately roll over the Saver’s Match contribution to the individual’s chosen retirement plan. … [T]his type of rollover would be treated like any other rollover and would not be subject to special Saver’s Match contribution rules.
Where a plan receives the Saver’s Match directly from the federal government (via the automatic match path), a number of Saver’s Match-specific rules apply:
Direct Saver’s Match amounts are generally treated as elective deferrals for rollover, involuntary cash-out, loans, Qualified Joint and Survivor, required minimum distribution (RMD), and in-plan Roth rollover purposes.
They are excluded from section 402(g) (salary reduction contribution limit)/catch-up, and section 415 limits and disregarded for nondiscrimination testing and certain SIMPLE and top-heavy testing.
The Saver’s Match principal amount cannot be distributed for hardship or unforeseeable emergency, although attributable earnings can be; therefore, plans allowing hardship withdrawals must separately account for the Saver’s Match source.
Form 5500-series reporting must identify the aggregate Saver’s Match amount received directly from Treasury.
Plans accepting the match from Treasury will have to be amended, as will their related SPDs/SMMs.
In contrast, because under the registration or rollover paths a conduit IRA is used, the Saver’s Match is simply treated by the receiving plan as a rollover, and those rules generally do not apply.
As noted, the IRS has requested comments on (among other things) the alternative paths outlined in the Notice for getting the Saver’s Match into retirement plans. Comments on the Notice are due by October 5, 2026.
Sponsors will want to consult with counsel and with their recordkeeper about whether accepting Saver’s Match contributions will be practical.
We will continue to follow this issue.
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This is a publication of O3 Plan Advisory Services. If you have any comments or have questions about regulatory developments, please contact your relationship manager or Mike Barry at mbarry@octoberthree.com.
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