The Saver’s Match, created by the SECURE 2.0 Act of 2022, is poised to transform retirement savings for low-income workers, and could bring a whole new audience to financial advisors. Set to launch in 2027, this program will convert the existing Saver’s Credit into a federal government match, offering up to $1,000 at a rate of 50 cents per dollar contributed.
According to the Employee Benefit Research Institute, at least 21.9 million workers will qualify for the Saver’s Match. However, industry experts are scrambling to ensure its effective implementation by the 2027 deadline.
Kim Olson from the Pew Charitable Trusts is leading efforts to assist the Treasury and IRS in launching the program, according to planadviser. Key focus areas include simplicity, efficiency, and awareness. Pew has convened working groups to address program publicity, eligibility identification, and fund distribution coordination.
Emerson Sprick of the Bipartisan Policy Center highlights the Saver’s Match as a significant improvement over the current Saver’s Credit, which faces issues such as low federal income tax liability among its target group and lack of awareness.
One major challenge is the “plumbing” with recordkeepers. Spencer Williams of the Retirement Clearinghouse suggests that the existing Portability Services Network could be adapted to support the Saver’s Match, providing a system for participant identification, account matching, and fund transfers.
Implementation hurdles include coordinating with state retirement programs, many of which use post-tax Roth accounts that currently can’t receive government funds. Solutions may involve creating separate pre-tax accounts for eligible participants.
Experts stress the importance of a robust public awareness campaign to ensure eligible workers know about and utilize the program. They hope the IRS will prominently feature the Saver’s Match during tax filing season.
Despite the challenges, the Saver’s Match represents a significant investment in low-to-moderate income workers’ retirement savings. Its successful implementation could potentially reduce future reliance on other social assistance programs, making it a crucial development for both beneficiaries and the U.S. retirement system as a whole – and could create a new clientele for financial advisors.
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