Should an employer’s retirement plan accept saver’s-match contributions?

For the 2022-enacted “saver’s match”, Internal Revenue Code § 6433 provides the Treasury pays the credit “as a contribution” to the eligible individual’s applicable retirement savings vehicle.

Whether (i) an eligible retirement plan or (ii) an Individual Retirement Account or Individual Retirement Annuity, a plan or an IRA is not an applicable retirement savings vehicle unless it “accepts contributions made under this section[.]”

I.R.C. (26 U.S.C.) § 6433(e)(2)(C) https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap65-subchapB-sec6433.htm.

Could a plan sponsor design a plan not to accept a § 6433 contribution?

If so, what factors might influence a plan sponsor’s decision-making about whether to allow or refuse saver’s-match contributions?

A § 6433 contribution gets some treatments and restrictions that could be different from those of other elective-deferral amounts. Does this affect anyone’s analysis and decision-making?

Accepting saver’s-match contributions likely requires yet more separate subaccounting. Does that affect decision-making?

Imagine a plan easily would meet all coverage and nondiscrimination conditions without accepting § 6433 contributions. Might that affect decision-making?

What else should an employer—or a service provider—think about?

The Saver's Match has many provisions the would require separate accounting such as the SM is not counted towards annual limits and is not eligible for hardship distributions or emergency withdrawals.  The SM is treated like an elective deferral but it must be treated like a pre-tax deferral and not a Roth deferral.

From the perspective of a recordkeeping system, ignoring a plan account for purposes of limits and compliance is not a common feature and could require a significant effort to provide separate accounting for the SM.

Whether an employee qualifies for the SM and calculating the amount of any contribution is done by the employee when preparing their tax return.  The IRS would then ACH the SM to the plan (and I don't thing the IRS has figured out how the mechanics on how this will work).  The problem for the accepting plan is there are circumstances primarily due to in-service withdrawals made from the plan where the SM will be reduced or disallowed.  The plan likely will not have the information needed to identify the erroneous amounts, much less to calculate how much should be distributed.

The IRS is expected to modify the Form 5500 for a plan to report the aggregate total SM received by the plan which likely will be used by the IRS to identify plans to review for compliance.

Unless the plan sponsor has a large population of employees who earn under the AGI income limits (married joint filers phasing out with AGI $41,000 to $71,000 and single filer phasing out $20,500-$35,500), then they likely should not accept the SM.  If the plan sponsor wishes, they could inform employees about the availability of the Saver's Match that can be made to an IRA, and encourage to make deferrals to the qualified plan sufficient for the employees to get the $1000 SM limit.

Paul I, thank you for adding information to aid my thinking.

BenefitsLink neighbors, here’s a follow-up question:

The saver’s-match changes apply to tax years that begin on or after January 1, 2027. An eligible individual would not specify her choice of her applicable retirement savings vehicle to receive the US Treasury’s saver’s-match contribution until, in early 2028, she files her 2027 income tax return.

Imagine plan-document amendments and restatements done in 2026 (and through 2027) have no adoption-agreement item, no other check-a-box item, and nothing else in a service provider’s plan-documents regime to specify whether the plan accepts or refuses a saver’s-match contribution. Imagine the base plan too is silent about whether the plan accepts or refuses a saver’s-match contribution. (Maybe the plan sponsor’s choice, retroactive to 2028, becomes documented in 203n.)

Imagine the most recent (in early 2028) summary plan description or summary of material modifications is generated from the plan documents. So, imagine the SPD or SMM communicates nothing about whether the plan accepts or refuses a saver’s-match contribution.

How would a participant, seeking in early 2028 to complete her 2027 Form 1040 or a Schedule of it, know whether her employer’s retirement plan would accept a saver’s-match contribution?

Do my guesses bear mistaken assumptions?

What service methods might recordkeepers build?

(For a plan with tens of thousands of participants, including many who might be § 6433’s eligible individuals, telling an inquirer to “ask human resources” is an unwelcome service.)