How will the Saver’s Match contained in SECURE 2.0 affect race/gender disparities in 401(k) balances?
It’s a question tackled in the latest analysis from the Collaborative for Equitable Retirement Savings (CFERS), comprised of three high-profile retirement plan research organizations. 
It found that the Saver’s Match “would help close the racial wealth gap in 401(k) plans, particularly for Black females while providing benefits to workers across all races.”
Beginning in 2027, the Saver’s Match will offer a 50% match on the first $2,000 of a participant's retirement savings contributions.
CFERS also found that “when results are combined for all ages from 25-64, the increase in the account balance/salary ratios at age 65 can be as high as 21.4% to 33.7%, depending on assumed filing status and eligibility as well as behavioral assumptions.”
Specifically, if workers increase their contributions to collect the match fully, “it could have a significant impact on their savings relative to their final salaries,” according to Morningstar Retirement’s Jack VanDerhei, the report’s author.
“The most surprising thing to me is how much of the impact depends on whether the Savers’ Match encourages participants to contribute more in order to get the full benefits of it,” VanDerhei said. “For example, Black females ages 25-34 who are currently eligible to benefit from the program will experience an average increase in the ratio of account balance to salary at age 65 of 10.5% if they do nothing and just benefit from the Saver’s Match on their baseline contribution behavior.”
However, he noted that for those who contribute less than $2,000 and increase their annual contribution to that level, their average increase in the ratio of account balance to salary at age 65 jumps to 27.4%.
“I think this shows how valuable plan sponsors, advisors, and record-keepers can be in educating 401(k) participants in taking maximum advantage of the program starting in 2027,” VanDerhei added.
The Saver’s Match, which is scheduled to replace the Saver’s Credit for tax years beginning after 2026, enables qualified individuals participating in an employer-sponsored retirement plan or contributing to an IRA to receive a 50% federal matching contribution up to a maximum of $1,000 (or $2,000 if married and filing jointly), which is deposited directly into the taxpayer’s plan or IRA.
To qualify for the Saver’s Match, taxpayers must make contributions to an employer-sponsored retirement plan or IRA and have an adjusted gross income of $71,000 or below if married and filing jointly, $53,250 or below if filing as head of household, or $35,000 or below if single or married but filing separately. The thresholds are to be indexed after 2027.
THE FULL REPORT CAN BE DOWNLOADED HERE
