U.S. Sen. Ron Wyden (D-OR), ranking member of the Senate Finance Committee, has introduced legislation that will boost American retirement savings.
The Savers Match Enhancement Act would double the federal matching of taxpayer contributions to tax-preferred retirement savings accounts like IRAs and 401k programs.
“As the cost of living and inflation continue to increase, Americans need more options to help them save for retirement so they can live with dignity in their later years,” Wyden said. “This bill would alleviate some of the financial burdens that working Americans face when planning for their retirement and ensure the earnings they are able to set aside for retirement savings will have the largest impact possible.”
Wyden’s office said this legislation is the first time the federal government would provide for contributions to working American’s IRA and 401k plans. The savers match program serves as a refundable tax credit deposited directly into American retirement accounts.
“While many Americans have jobs that provide 401(k) plans with employer-provided matching, more and more hardworking Americans are self-employed, entrepreneurs or contract-based and do not have access to employer matching contributions. Congress has a responsibility to ensure that all Americans, regardless of how they are employed, have access to a sufficient and reliable source of income once they retire,” Wyden said.
Under current law, starting in 2027, a saver may receive a saver’s match contribution of up to 50 percent per year of the first $2,000 contributed to a retirement account. Therefore, the maximum federal matching contribution per year is $1,000. Wyden’s bill would double the matching rate from 50 to 100 percent, increasing savings up to $2,000 per year in matching contributions on the first $2,000 they contribute to an IRA or 401k. The bill would also raise the income range to incorporate more middle-class Americans. As an example, a single taxpayer making between $20,500 to $35,500 is currently eligible for the matching funds. Wyden’s bill would increase that salary range to between $42,500 to $57,500 for a single taxpayer.
If passed, the law would go into effect in 2027.