A new federal program designed to boost retirement savings for lower-income Americans carries a structural flaw that will force millions of Roth IRA holders to open a second account just to collect a government match worth up to $2,000 a year.

The Saver’s Match, authorized by the 2022 Secure 2.0 law and set to launch with the 2027 tax year, requires that matching funds be deposited into a traditional IRA. But the vast majority of workers in state-run auto-enrollment programs save through Roth IRAs, and fewer than 1% ever switch. The mismatch creates unnecessary cost and complexity for exactly the people the program was built to help.

The program replaces the existing Saver’s Credit after the 2026 tax year. Where the old credit was nonrefundable and could only reduce a tax bill, the new match deposits real dollars into a retirement account. The federal government will match 50% of contributions up to $2,000, meaning a single filer could receive up to $1,000 per year and joint filers up to $2,000. Full matching kicks in for single filers earning $20,500 or less and joint filers earning $41,000 or less, with reduced matches available up to $35,500 and $71,000, respectively.

That is a meaningful incentive for workers near the bottom of the income ladder. But as CNBC reported in detail, the law as written creates a catch that undermines its own purpose.

The Roth-Traditional Mismatch

Seventeen states now operate auto-IRA programs that enroll workers without employer-sponsored plans into retirement accounts through payroll deduction, typically at a 3% or 5% default rate. Hawaii is expected to become the eighteenth state later this year. As of April 30, those programs held 1.2 million accounts with $3 billion in assets, according to the Center for Retirement Initiatives at Georgetown University.

Nearly all of those accounts are Roth IRAs. And fewer than 1% of participants ever switch to a traditional IRA, according to data from Vestwell, the financial technology firm that administers most state-run programs.

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The Secure 2.0 law, however, specifies that the Saver’s Match can only be deposited into a traditional, pre-tax IRA. Contributing to a Roth qualifies a worker for the match. But the match itself cannot land in the Roth.

Ed Slott, a certified public accountant and IRA expert, put the contradiction plainly:

“It’s in the law. It specifically says the match can only go to pre-tax accounts, which is kind of weird because contributing to a Roth qualifies for the match, which can’t go into the Roth.”

The practical result: a worker saving through a state Roth IRA program will need to open a separate traditional IRA just to receive the government’s matching funds. That means a second account, potentially a second set of fees, and a layer of administrative friction that hits hardest among workers least equipped to navigate it.

Who Bears the Cost

The 53.7 million full-time and part-time workers between ages 18 and 65 who lack access to an employer-based retirement plan, a figure drawn from 2025 research by the Economic Innovation Group, are the target population for both state auto-IRA programs and the Saver’s Match. These are the workers earning the least, saving the least, and facing the steepest barriers to building any retirement cushion at all.

Asking them to manage two accounts with different tax treatments is not a trivial burden. Traditional IRA withdrawals before age 59½ carry a 10% penalty unless an exception applies, and distributions are taxed as ordinary income. Roth withdrawals, by contrast, come out tax-free in retirement. The two structures serve different purposes, and a worker who does not understand the distinction could make costly mistakes.

Angela Antonelli, executive director of Georgetown’s Center for Retirement Initiatives, acknowledged the tension directly. State programs, she said, “absolutely want, can and will help their participants take advantage of the Saver’s Match, because these participants are exactly the low- to moderate-income workers the match was designed for.” But she added a blunt caveat:

“There is unnecessary administrative complexity because the match must be deposited into a traditional IRA, while state programs default savers into a Roth IRA.”

The problem extends beyond state programs. As Courtney Eccles, senior vice president of relationship management at Vestwell, noted, “Anyone who is saving for retirement and the only vehicle they’re currently utilizing is a Roth IRA, they’re going to have the same potential concern whether they’re in a state program or not.”

Can Washington Fix It?

The White House has signaled awareness of the issue. In an email response to CNBC, a White House official said that “although specific operational elements of the Saver’s Match are still being developed, the expectation is to ultimately allow for both traditional and Roth IRAs.”

That language is worth parsing carefully. “The expectation” is not a commitment. “Ultimately” is not a timeline. And the Treasury Department, which is expected to issue guidance and distribute the match after 2027 tax returns are filed in early 2028, has not yet released any related guidance. The Treasury Department did not respond to CNBC’s inquiry.

Changing the law to allow the match to flow into Roth accounts would require Congressional action. Whether that action is planned, likely, or even under discussion is unclear from available reporting. The legislative calendar is not known for urgency on retirement plumbing.

John Scott, director of the Retirement Savings Project at the Pew Charitable Trusts, suggested a more incremental path. Treasury could reduce the administrative burden by waiving some of the paperwork required to open a traditional IRA for workers who already have a state-established Roth:

“What might help both with fees and the complications on the administrative side is where Treasury might be able to help out. For example, if [the state] already set up a Roth for the participant, maybe some of the paperwork that’s required to open the traditional IRA would be waived or reduced… which would make it easier to set these up and probably reduce the cost as well.”

That would help. But it would not eliminate the fundamental issue of workers managing two accounts with different rules, different tax consequences, and different withdrawal penalties.

What This Means for Retirement Savers

The Saver’s Match is, on paper, a significant improvement over the Saver’s Credit. A direct deposit into a retirement account is more tangible and more useful than a nonrefundable tax credit that many low-income filers could not fully use. The government is putting real money on the table for people who need it most.

But the Roth-traditional mismatch is a design flaw that could blunt the program’s effectiveness. Workers who do not understand the requirement may simply miss the match. Workers who do understand it face added cost and complexity. And the population most likely to be affected is the population least likely to have a financial advisor walking them through the mechanics.

A website called TrumpIRA.gov is expected to launch next year to help workers enroll in IRAs and eventually collect the Saver’s Match. Whether that platform will address the Roth gap or simply route workers into traditional accounts remains to be seen. As we noted in our overview of TrumpIRA.gov and the federal Saver’s Match, the operational details are still thin.

Eccles captured the frustration shared by many in the retirement industry: “In an ideal world, if there was the ability to take those matched dollars into a Roth, I don’t think anyone would argue [with] that.”

The Bigger Picture for Capital Preservation

For readers focused on protecting purchasing power over a multi-decade retirement horizon, the Saver’s Match story is a useful case study in how well-intentioned policy can create unintended friction. The program’s income thresholds and match structure are reasonable. The Roth exclusion is not.

The broader context matters too. IRA contributions have been surging in recent years, but the question of what savers are actually buying with those contributions is at least as important as the account structure. A traditional IRA holding assets that lose ground to inflation is not meaningfully better than a Roth IRA doing the same thing.

For workers whose retirement savings have already fallen short of what they need, the Saver’s Match could be a genuine lifeline. But only if they can actually access it without stumbling over a bureaucratic technicality baked into the statute.

The gap between what Washington designs and what workers experience is not new. The real cost of inflation on retirement savings is already eating into the purchasing power of every dollar set aside, whether it sits in a Roth or a traditional account. Adding unnecessary complexity to the one program aimed at the most vulnerable savers does not help.

And for near-retirees who are already saving more but trusting less, the Saver’s Match debacle reinforces a familiar lesson: the system’s incentives do not always align with the saver’s interests.

Key Details of the Saver’s Match Program

  • Launch: 2027 tax year; first match distributions expected early 2028
  • Match rate: 50% of contributions up to $2,000
  • Maximum match: $1,000 (single filers), $2,000 (joint filers)
  • Full match income limits: $20,500 (single), $41,000 (joint)
  • Reduced match income limits: Up to $35,500 (single), $71,000 (joint)
  • Deposit restriction: Traditional IRA only (Roth IRA not currently eligible to receive match)

The irony of the Saver’s Match is that Congress wrote a law generous enough to matter and precise enough to get in its own way. Until the Roth gap is closed, the program’s biggest beneficiaries will be the ones most likely to miss it.