Federal Saver’s Match: Challenges and Fiduciary Risks

In 2027, the Saver’s Match, a provision in the SECURE 2.0 Act of 2022, becomes applicable. The Saver’s Match provides eligible workers with a federal match of up to $1,000 annually on retirement savings. Amidst optimism that the Saver’s Match will ultimately benefit workers, retirement industry professionals urge plan sponsors and other fiduciaries to be alert to risks posed by lags in formal guidance as to the mechanics of how the matching federal funds are to be deposited into retirement accounts. 

Understanding The Saver’s Match and Related Fiduciary Risks

The Center for Retirement Research at Boston College confirms that the Saver’s Match begins in 2027, and under it: “The government will provide eligible taxpayers a 50-percent match on the first $2,000 of contributions to a retirement plan. Eligibility is based on household income. Single taxpayers with $20,500 or less qualify for the full match, and the match phases out at $35,500. For couples, the comparable numbers are $41,000 for the full match, with the match phased out at $71,000.” 

By addressing problems attributed to the Saver’s Credit program it is replacing, the Saver’s Match may make a tangible difference over time. For example, as Alicia H. Munnell, a senior advisor at the Center for Retirement Research reports: “Estimates from the Morningstar study confirm, the Saver’s Match could have a meaningful impact on retirement wealth at 65 for Gen Z and Millennial workers – those who will spend a major part of their work lives under the new program….The results show that, depending on the behavioral response, the Saver’s Match could increase retirement wealth at 65 for Gen Z and Millennials by 8 to 12 percent.” 

With implementation of the Saver’s Match now fast approaching, 401(k) and 403(b) retirement plan recordkeepers and sponsors are pondering the mechanics and responsibilities involved in coordinating with the IRS “to receive and allocate matching deposits into participant accounts,” as well as conduct participant education efforts. Attorneys at Snell & Wilmer note that “The IRS has issued Notice 2024-65 requesting public comments on implementation, and additional guidance from the Treasury Department and the IRS is expected before the program takes effect.” Meanwhile, as Christopher Carosa points out at Fiduciary News:

• Saver’s Match fiduciary risk is no longer theoretical. It’s approaching fast. And fiduciaries are being asked to prepare without a complete rulebook, without clear guardrails, and without full control over the inputs that drive outcomes.The shift from a tax credit to a direct federal deposit…fundamentally alters how money enters a plan, introducing operational complexity, compliance ambiguity, and fiduciary exposure that plan sponsors cannot easily see, let alone manage.

• The core issue is not the policy intent. Expanding retirement savings for lower-income workers aligns squarely with ERISA’s participant-first mandate. But good intentions do not eliminate fiduciary risk. They often mask it … .When federal dollars begin flowing directly into private plans, fiduciaries are forced to answer a question they’ve never faced at this scale: where does responsibility begin when control is limited, and where does it end when errors originate outside the plan? That boundary remains unclear.

Ambiguity Requires Risk Management

Pending further formal guidance from the federal government about roles, responsibilities and mechanics to ensure the success of the Saver’s Match, what’s a retirement plan sponsor to do? For starters, Carosa reminds us: “For plan sponsors that desire to accept the Saver’s Match benefit in their plans, the plans will also need to be amended to provide for those contributions.” Additionally, Carosa advises: “The fiduciaries who navigate this transition successfully will not be the ones who wait for perfect guidance. They will be the ones who act deliberately, build processes early, document their decisions clearly, and align each step with ERISA’s core mandate to act in the best interest of participants.”

Given our inherent fiduciary responsibilities, it’s also a very wise time for retirement plan sponsors to add protection. In the face of ambiguity, mistakes or oversights can lead to trouble more quickly than ever. Defense against allegations of ERISA errors and oversights is an extremely costly out of pocket expense (averaging over $600 per hour)–even if nothing has been done wrong. 

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