A Chapter in My Late Start Retirement Journey
My older son finished seminary, worked in ministry for a while, and was recently ordained as an associate pastor. He lives on donations and on the money I send him. His income is small.
I started wondering how I could help, and that’s how I found a program for people with lower incomes: the Saver’s Credit. It’s about to turn into something better. Starting in 2027, the Saver’s Match is a federal retirement savings match: if your income is within the limits, the government adds up to $1,000 to the $2,000 you put into a retirement account. I wanted to write this up for my son and for anyone else preparing for retirement. Everything here is as of October 2026 and is based on IRS Notice 2026-48, issued in August 2026.
The Two Programs at a Glance
| Saver’s Credit | Saver’s Match | |
|---|---|---|
| When | Through tax year 2026 | Starting with tax year 2027 |
| How it works | A tax credit that reduces your tax bill | The government deposits money into your retirement account |
| Benefit | 50%, 20%, or 10% of up to $2,000 saved | Up to 50% of up to $2,000 saved |
| Maximum | $1,000 per person | $1,000 per person |
| If you owe no income tax | No benefit | You can still receive it |
| Form | Form 8880 | Form 8880-A (new, not yet published) |
One side note: contributions to ABLE accounts for people with disabilities can still earn the Saver’s Credit after 2026.
The Program We Have Now: The Saver’s Credit (Through 2026)
If you save in an IRA or a workplace retirement plan, you get a credit worth 50%, 20%, or 10% of your contribution, depending on your income. Only the first $2,000 per person counts, so the most you can get is $1,000 per person. These are the 2026 adjusted gross income (AGI) limits.
| Credit rate | Single | Head of household | Married filing jointly |
|---|---|---|---|
| 50% | $24,250 or less | $36,375 or less | $48,500 or less |
| 20% | $24,251 – $26,250 | $36,376 – $39,375 | $48,501 – $52,500 |
| 10% | $26,251 – $40,250 | $39,376 – $60,375 | $52,501 – $80,500 |
| No credit | Over $40,250 | Over $60,375 | Over $80,500 |
There is one big catch. The credit is nonrefundable. It can only reduce the income tax you owe, so if you owe nothing, it’s worth nothing. If you owe $300 in income tax and qualify for a $1,000 credit, you only get $300. The lower your income, the more likely you are to be shut out of the benefit.
What Changes in 2027: The Saver’s Match
The SECURE 2.0 Act of 2022 created the Saver’s Match to close that gap. The Saver’s Match is a federal retirement savings match. Instead of cutting your tax bill, the government deposits money directly into a retirement account for you, even if you owe no income tax. The match is up to 50% of the first $2,000 you contribute, so the maximum is $1,000. There’s no minimum contribution. If you file jointly, your income is counted together, but eligibility and the match are calculated for each spouse separately, so a couple can receive up to $2,000.
These are the 2027 income (MAGI) limits.
| Full 50% match | Partial match | No match | |
|---|---|---|---|
| Single | $20,500 or less | $20,501 – $35,499 | $35,500 or more |
| Head of household | $30,750 or less | $30,751 – $53,249 | $53,250 or more |
| Married filing jointly | $41,000 or less | $41,001 – $70,999 | $71,000 or more |
Above the full-match limit, the match shrinks gradually instead of dropping to zero. The reduction is 50 percentage points × (your MAGI − the starting amount) ÷ the width of the range, rounded down. The IRS gives this example. A single filer with $30,000 of MAGI who contributes $1,500 gets a reduction of 50 × ($9,500 ÷ $15,000) = 31.67, rounded down to 31 points. That leaves a 19% match, or $285. Starting in 2028, the starting amounts are adjusted for inflation, but the width of the ranges and the $2,000 cap on contributions are not.
Here’s how you claim it. You save during 2027, then file your 2027 return in 2028 and claim the match on the new Form 8880-A. The government deposits the match into the retirement account you designate. The form and many details are still being worked out, so the final rules could differ.
Eligibility and Pitfalls
Both programs share some basic requirements:
- You must be at least 18.
- You can’t be a full-time student (generally, full-time for at least five months of the year).
- You can’t be claimed as a dependent on someone else’s return.
The Saver’s Match has more fine print.
First, income is measured differently. For the match, MAGI starts with AGI and then adds back your pre-tax retirement contributions (such as 401(k) deferrals) and any deductible traditional IRA contributions. You can’t lower your income for this purpose by saving more pre-tax.
Second, withdrawals can reduce the amount that counts. Distributions from retirement accounts during the year you contribute, the two years before, and the period up to the filing deadline for that year reduce your qualifying contributions. Rollovers and certain other transactions are excluded. The IRS example: you put $2,000 into a 401(k) in 2027 but took a $900 IRA withdrawal in 2026 and a $500 withdrawal in 2027. Only $600 counts, so a 50% match is $300.
Third, the destination account is limited, and someone has to accept it. The government can deposit the match directly into certain 401(k), 403(b), and governmental 457(b) plans, and into traditional (non-Roth) IRAs. Plans and IRA providers aren’t required to accept it. For a traditional IRA, you’ll need an account at a provider that has registered with the Treasury, and you must open it before you claim the match so you can enter its IRA tracking number. According to the IRS notice, the Treasury plans to launch a website, TrumpIRA.gov, listing IRA providers that accept the match by January 1, 2027.
If you want the match in a Roth IRA, the Treasury would first put it in a temporary traditional IRA and then immediately transfer it. That transfer counts as a Roth conversion, so income tax applies. The simplest path looks like taking the match in a traditional IRA or a workplace plan. That’s my reading, so check the final rules.
Fourth, early withdrawals can cost you. The deposit isn’t taxable income, but later distributions follow normal income tax rules. If you take the money out before age 59½, the 10% early distribution tax can apply, along with a separate recovery tax.
Fifth, there’s an extra question for immigrants. The notice says the Justice Department’s Office of Legal Counsel treats the Saver’s Match as a “federal public benefit,” and that non-qualified aliens are generally barred from such benefits. Treasury says it will address this in its proposed regulations. Citizens and green card holders (generally “qualified aliens”) shouldn’t be affected, but if you’re on a nonimmigrant visa, watch for the final rules.
My Son’s Situation: Questions to Settle
From here on, ministers can be different from ordinary employees, so a tax professional’s input is essential. This is what I understand so far.
Income tax and Social Security tax are handled separately. An ordained minister is generally treated as an employee for income tax but as self-employed for Social Security and Medicare tax. The Saver’s Credit only reduces income tax. For a pastor with low income and little income tax, the credit can be worth close to nothing. That’s why the Saver’s Match is welcome news.
A housing allowance may lower income. A housing allowance designated in advance by the church can be excluded from income tax. The IRS notice’s definition of MAGI doesn’t list the housing allowance as something added back. The final rules need to confirm how it’s treated.
IRA contributions require compensation. You can only contribute up to what you earn. Pay the church gives as salary or a stipend is compensation, but a gift sent personally by a supporter may not be. We need to sort out which category my son’s income falls into.
Parents can help fund an IRA with gifts. The IRS doesn’t care where the contribution money comes from, so as long as the amount is within his own compensation, a parent’s gift can fund an IRA. Gifts have an annual exclusion, which was $19,000 per recipient in 2025 and is adjusted over time, so check the current figure with the IRS.
What to Do Now
- Estimate this year’s income. See whether your 2026 AGI falls in the Saver’s Credit table and how much income tax you’ll owe.
- Think about 2026 and 2027 separately. An IRA contribution you make between January 1 and April 15, 2027 can be designated either for 2026 (Saver’s Credit) or for 2027 (Saver’s Match). If you owe income tax, designating it for 2026 may be better. If you owe none, look at designating it for 2027.
- Plan for 2027. If $2,000 at once is too much, roughly $167 a month by automatic transfer gets you there. Check whether your 2027 MAGI will fit within the limits. You can also send a tax refund directly to an IRA with Form 8888, and it counts as a contribution, but the refund must be deposited by the filing deadline to count for that year.
The IRS has also started sending CP321J notices to people who claimed the Saver’s Credit for 2025 or whose income falls in the range. If you got one, it’s about this program. It doesn’t mean you’ve qualified. It’s a heads-up to prepare for 2027.
For My Son
I started preparing for retirement late. I’d like my son to know about these programs early. In any year his income fits the limits, if he puts in $2,000 and the government adds $1,000, that’s not a small amount.
This post is general information, not tax or legal advice. Your results depend on your situation, and the rules for the retirement savings match are still being finalized. Please check the IRS guidance and talk to a tax professional.
Sources
- IRS Notice 2026-48, Notice of Intent to Issue Regulations With Respect to Saver’s Match Contributions (Aug. 7, 2026): https://www.irs.gov/pub/irs-drop/n-26-48.pdf
- IRS Notice 2025-67 (2026 retirement plan limits, including Saver’s Credit income limits)
- Internal Revenue Code §25B (Saver’s Credit) and §6433 (Saver’s Match)