Roth IRA owners may need a second account to claim the Saver’s Match

For lower- and moderate-income workers who contribute to retirement savings, the new federal Saver’s Match — scheduled to start with the 2027 tax year — could be a much-welcomed addition to their nest egg. Yet many current savers may first need a different account to get the money.

Authorized by the 2022 Secure 2.0 retirement legislation, the Saver’s Match program will provide income-eligible retirement savers with a matching annual contribution worth up to $1,000 for single tax filers and $2,000 for joint filers. They can receive that benefit whether they save through a workplace plan like a 401(k) or an individual retirement account.

The catch: Although contributions to an IRA may qualify workers for the match, any money the worker is entitled to can only go into a traditional IRA — not a Roth IRA. This means that workers who save via a Roth — including nearly all of those enrolled in state-run auto IRA programs — would need a traditional account to receive the match, experts say.

As of April 30, more than 1.2 million accounts in the state programs held $3 billion in assets, according to Center for Retirement Initiatives at Georgetown University.

“State programs absolutely want, can and will help their participants take advantage of the [Saver’s Match], because these participants are exactly the low- to moderate-income workers the match was designed for,” said Angela Antonelli, executive director for the center.

“But there is unnecessary administrative complexity because the match must be deposited into a traditional IRA, while state programs default savers into a Roth IRA,” Antonelli said.

A White House official said in an email response to a CNBC inquiry that “although specific operational elements of the Saver’s Match are still being developed, the expectation is to ultimately allow for both traditional and Roth IRAs.”

However, it could take an act of Congress to allow the money to go into a Roth, experts say.

“It’s in the law,” said Ed Slott, an IRA expert and certified public accountant. “It specifically says the match can only go to pre-tax accounts, which is kind of weird because contributing to a Roth qualifies for the match, which can’t go into the Roth.”

The program is replacing the so-called saver’s credit, which continues to be available through the 2026 tax year for lower- and moderate-income retirement savers. While similar to the Saver’s Match — it’s worth a maximum of $1,000 for single filers and $2,000 for joint filers, depending on income — it is a tax credit that is nonrefundable, meaning it can only be used to reduce your tax burden rather than boost a refund.

The new Saver’s Match is part of an ongoing broader effort to help workers better save for retirement. An estimated 53.7 million full-time and part-time workers between the ages of 18 and 65 lack access to any employer-based retirement plan, according to 2025 research from the Economic Innovation Group, a bipartisan public policy group.

A new website, TrumpIRA.gov, is expected to launch next year for workers to enroll in IRAs and, if eligible, collect the Saver’s Match when it is distributed.

While the Treasury Department has not yet issued any related guidance, experts expect that the match would be given once a worker’s 2027 tax return is filed in early 2028. The agency did not respond to a CNBC inquiry seeking more information.

Meanwhile, 17 states now have active retirement programs for workers who lack a company-sponsored plan. Hawaii is expected to become the 18th state later this year. Although there are some minor differences among these programs, most involve employees being automatically enrolled in Roth IRAs through a payroll deduction — starting around 3% or 5% — unless they opt out.

Generally, the pre-tax money that’s deposited in traditional IRAs cannot be withdrawn before age 59½ without paying a 10% early-withdrawal tax penalty, unless an exception is met.

With Roth IRAs, however, savers generally can withdraw their contributions at any time without taxes or penalties because the money was contributed after-tax.

While some of the state programs offer a traditional IRA if the worker wants it, less than 1% switch to one from the default Roth, according to Vestwell, a financial technology company that administers most of the state programs. 

“In an ideal world, if there was the ability to take those matched dollars into a Roth, I don’t think anyone would argue [with] that,” said Courtney Eccles, senior vice president of relationship management at Vestwell.

And, of course, the incompatibility will apply to retirement savers outside of the state programs as well.

“Anyone who is saving for retirement and the only vehicle they’re currently utilizing is a Roth IRA — they’re going to have the same potential concern whether they’re in a state program or not,” Eccles said.