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Roth IRA Savers May Need Second Account to Claim Federal Match

Lower- and moderate-income workers saving for retirement will gain access to a new federal matching contribution beginning in 2027. However, many current savers face a structural obstacle to claiming the benefit.

The Saver's Match program, established through 2022 legislation, will provide eligible savers with annual matching contributions up to $1,000 for single filers and $2,000 for joint filers. While contributions made to Roth IRAs qualify workers for the match, current law prohibits the matching funds themselves from being deposited into Roth accounts. Instead, the money must go into a traditional IRA.

This creates a challenge for participants in state-run auto IRA programs, where over 99% of accounts are Roth IRAs. These savers would need to establish a separate traditional IRA to receive their matching contributions, experts say.