Starting in 2027, the US federal government will provide up to an additional $1,000 to individual retirement savings to help low-income and middle-income households build retirement funds. If a married couple files jointly, each can receive the benefit, allowing for a maximum support of $2,000 per household.
The new system is called ‘Savers’ Match’ and is based on the Security 2.0 Act enacted in 2022. It replaces the existing retirement savings tax credit (Savers’ Credit) and shifts from a method of reducing the tax burden to one where the government directly deposits matching funds into retirement accounts. It is designed to allow low-income individuals, who have little to no tax liability, to contribute additional retirement funds.
According to the Internal Revenue Service (IRS), the government provides 50% support on up to $2,000 of the amount an individual contributes annually. Therefore, the structure is such that if an individual contributes $2,000, the government adds an additional $1,000. If a married couple each contributes $2,000, they can receive a total of $2,000 in government support. A key feature is that benefits are available even if an individual has no federal income tax to pay, provided they meet the eligibility requirements. Eligibility is determined by income and tax filing methods. Individuals with a Modified Adjusted Gross Income (MAGI) of $20,500 or less as of 2027, and married couples filing jointly with a MAGI of $41,000 or less, are eligible to receive the full 50% support on their contributions.
If income exceeds this threshold, the support rate is gradually reduced, and individuals are excluded from eligibility if their income exceeds $35,500, while married couples are excluded if their income exceeds $71,000. Heads of households receive full support up to $30,750, and support is discontinued starting at $53,250. The income criteria are scheduled to be adjusted based on the inflation rate after 2027.
Basically, you must be at least 18 years of age by the end of the relevant year and not be reported as a dependent on another person’s tax return. Regular student status is also excluded. You must be a resident under federal tax law, and non-resident aliens are generally not eligible for benefits. You can qualify by contributing to workplace retirement plans, such as 401(k), 403(b), or government 457(b), or to an Individual Retirement Account (IRA).
The matching contribution is calculated based on contributions made in 2027, and an application must be submitted via IRS Form 8880-A during the 2028 tax filing. If the application is approved, the U.S. Treasury Department will deposit the funds into a designated retirement account. However, participants using Roth IRAs should pay attention to the method of receiving the funds. While contributions to a Roth IRA may be eligible for the matching calculation, current IRS guidelines state that government matching funds are paid directly to an eligible retirement account, not the Roth IRA. As the Treasury Department and the IRS are establishing specific payment procedures, further verification is required regarding the specific receipt method for each account.
The IRS recommended that there are no separate preparations required for 2026, but that starting in 2027, one should save in a qualified retirement account and keep records of contributions.