Millions May Qualify for Free Retirement Money

More than 20 million Americans could qualify for free retirement money under the new SECURE 2.0 Act.

This legislation permits some Americans to get a matching retirement plan contribution from the federal government beginning in 2027.

Under SECURE 2.0, several new retirement provisions were added to the current system. Lower-income workers can now match their retirement savings to their qualified retirement plans.

Among all tax filers, 83.8 million taxpayers have eligible incomes for the Saver’s Match, but you also need to have a wage income to take advantage of the new retirement match.

The number that meets those standards is actually 21.9 million when looking at those who contribute to employment-based retirement plans or traditional IRAs, according to a new Employee Benefit Research Institute report.

All matches will have a maximum value of $1,000 at a rate of $0.50 per dollar contributed by each employee, and the cap is at $2,000 annually.

“The match will be directly deposited as a Roth contribution into the employee’s retirement account, so it will grow tax-free and not be subject to taxes upon withdrawal,” financial planner Stephan Drescher told Newsweek.

Those who have an adjusted gross income of up to $80,000 for couples or $40,000 for single-filers are eligible, with the federal government matching 50 percent of the employee’s contributions.

“This savings match scheduled to go into effect in 2027 is desperately needed by many working Americans,” Alex Beene, financial literacy instructor for the state of Tennessee, told Newsweek. “We’ve known for many years there was a significant gap in the retirement savings of most Americans when compared to what they would actually need at retirement.

Lindsay Bryan-Podvin, financial therapist and founder of Mind Money Balance, said the prior offering, the Saver’s Credit, was confusing to many Americans as it allowed 10, 20 or 50 percent of your retirement contributions to offset taxes owed.

“While it helped reduce a tax bill, it didn’t exactly reward retirement savers for saving their money with additional money,” Bryan-Podvin told Newsweek.

It also marks one of the first times low- and middle-income earners have access to a legal loophole and stackable financial advantage like this, she said.

“Because this incentive is specifically for low- and middle-income earners, the ones most likely to struggle financially in retirement, it incentivizes them to save now,” Bryan-Podvin said. “This means eligible Americans don’t have to choose one matching benefit over the other. They get their employer match if their employer offers one and the ‘Saver’s Match,’ stacking both benefits.”

Still, it’s not an end all, be all program. Beene said this should not be seen as a full retirement offering, and personal savings and Social Security will still be necessary.

“It’s to fill in the savings gap for low-income workers,” Beene said. “If you’re an American who is approaching retirement, you should still be seeking to make regular contributions when you can. An extra $2,000 will certainly help, but it still should be the cherry on top to your savings, not the main dessert.”