26 USC 6433 - Saver’s Match

View all text of Subchapter B [§ 6411 - § 6433]

§ 6433. Saver’s Match

(a) In general

(1) Allowance of match

(2) Payment of match

(A) In general

(B) Exception

(b) Applicable percentageFor purposes of this section—

(1) In general

(2) PhaseoutThe percentage under paragraph (1) shall be reduced (but not below zero) by the number of percentage points which bears the same ratio to 50 percentage points as—

(A) the excess of—

(i) the taxpayer’s modified adjusted gross income for such taxable year, over

(ii) the applicable dollar amount, bears to

(B) the phaseout range.

If any reduction determined under this paragraph is not a whole percentage point, such reduction shall be rounded to the next lowest whole percentage point.

(3) Applicable dollar amount; phaseout range

(A) Joint returns and surviving spousesExcept as provided in subparagraph (B)—

(i) the applicable dollar amount is $41,000, and

(ii) the phaseout range is $30,000.

(B) Other returnsIn the case of—

(i) a head of a household (as defined in section 2(b)), the applicable dollar amount and the phaseout range shall be ¾ of the amounts applicable under subparagraph (A) (as adjusted under subsection (h)), and

(ii) any taxpayer who is not filing a joint return, who is not a head of a household (as so defined), and who is not a surviving spouse (as defined in section 2(a)), the applicable dollar amount and the phaseout range shall be ½ of the amounts applicable under subparagraph (A) (as so adjusted).

(1) In general

(2) Dependents and full-time students not eligibleThe term “eligible individual” shall not include—

(A) any individual with respect to whom a deduction under section 151 is allowed to another taxpayer for a taxable year beginning in the calendar year in which such individual’s taxable year begins, and

(B) any individual who is a student (as defined in section 152(f)(2)).

(3) Nonresident aliens not eligible

(d) Qualified retirement savings contributionsFor purposes of this section—

(1) In generalThe term “qualified retirement savings contributions” means, with respect to any taxable year, the sum of—

(A) the amount of the qualified retirement contributions (as defined in section 219(e)) made by the eligible individual,

(B) the amount of—

(i) any elective deferrals (as defined in section 402(g)(3)) of such individual, and

(ii) any elective deferral of compensation by such individual under an eligible deferred compensation plan (as defined in section 457(b)) of an eligible employer described in section 457(e)(1)(A), and

(C) the amount of voluntary employee contributions by such individual to any qualified retirement plan (as defined in section 4974(c)).

Such term shall not include any amount attributable to a payment under subsection (a)(2).

(2) Reduction for certain distributions

(A) In general

(B) Testing periodFor purposes of subparagraph (A), the testing period, with respect to a taxable year, is the period which includes—

(i) such taxable year,

(ii) the 2 preceding taxable years, and

(iii) the period after such taxable year and before the due date (including extensions) for filing the return of tax for such taxable year.

(i) any distribution referred to in section 72(p), 401(k)(8), 401(m)(6), 402(g)(2), 404(k), or 408(d)(4),

(ii) any distribution to which section 408(d)(3) or 408A(d)(3) applies, and

(iii) any portion of a distribution if such portion is transferred or paid in a rollover contribution (as defined in section 402(c), 403(a)(4), 403(b)(8), 408A(e), or 457(e)(16)) to an account or plan to which qualified retirement savings contributions can be made.

(D) Treatment of distributions received by spouse of individual

(e) Applicable retirement savings vehicle

(1) In general

(2) ElectionAny such election to have contributed the amount determined under subsection (a) shall be to an account or plan which—

(A) is—

(i) the portion of a plan which—(I) is described in clause (v) of section 402(c)(8)(B), is a qualified cash or deferred arrangement (within the meaning of section 401(k)), or is an annuity contract described in section 403(b) which is purchased under a salary reduction agreement, and(II) does not consist of a qualified Roth contribution program (as defined in section 402A(b)), or

(ii) an individual retirement plan which is not a Roth IRA,

(B) is for the benefit of the eligible individual,

(D) is designated by such individual (in such form and manner as the Secretary may provide).

(f) Other definitions and special rules

(1) Modified adjusted gross incomeFor purposes of this section, the term “modified adjusted gross income” means adjusted gross income—

(A) determined without regard to sections 911, 931, and 933, and

(B) determined without regard to any exclusion or deduction allowed for any qualified retirement savings contribution made during the taxable year.

(2) Treatment of contributionsIn the case of any contribution under subsection (a)(2)—

(A) except as otherwise provided in this section or by the Secretary under regulations, such contribution shall be treated as—

(i) an elective deferral made by the individual, if contributed to an applicable retirement savings vehicle described in subsection (e)(2)(A)(i), or

(ii) as an individual retirement plan contribution made by such individual, if contributed to such a plan,

(B) such contribution shall not be taken into account with respect to any applicable limitation under sections 402(g)(1), 403(b), 408(a)(1), 408(b)(2)(B), 408A(c)(2), 414(v)(2), 415(c), or 457(b)(2), and shall be disregarded for purposes of sections 401(a)(4), 401(k)(3), 401(k)(11)(B)(i)(III), and 416, and

(C) such contribution shall not be treated as an amount that may be paid, made available, or distributable to the participant under section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(i)(V), or 457(d)(1)(A)(iii).

(3) Treatment of qualified plans, etc.

(4) Erroneous matching contributions

(A) In general

(B) Distribution of erroneous matching contributionsIn the case of a contribution to which subparagraph (A) applies—

(i) section 402(a), 403(a)(1), 403(b)(1), 408(d)(1), or 457(a)(1), whichever is applicable, shall not apply to any distribution of such contribution, and section 72(t) shall not apply to the distribution of such contribution or any income attributable thereto, if such distribution is received not later than the day prescribed by law (including extensions of time) for filing the individual’s return for such taxable year, and

(ii) any plan or arrangement from which such a distribution is made under this subparagraph shall not be treated as violating any requirement under section 401, 403, or 457 solely by reason of making such distribution.

(5) Exception from reduction or offsetAny payment made to any individual under this section shall not be—

(A) subject to reduction or offset pursuant to subsection (c), (d), (e), or (f) of section 6402 or any similar authority permitting offset, or

(B) reduced or offset by other assessed Federal taxes that would otherwise be subject to levy or collection.

(6) Saver’s match recovery payments

(A) In general

(B) Specified early distributionFor purposes of this paragraph, the term “specified early distribution” means any portion of a distribution—

(i) which is from such applicable retirement savings vehicle to which a contribution has been made under subsection (a)(2),

(ii) which is includible in gross income, and

(iii) to which 72(t)(1) applies.

(i) In general

(ii) Contribution of excess

(iii) Limitation on contributions to applicable retirement savings vehicle other than IRAs

(iv) Treatment of repayments of distributions from applicable eligible retirement plans other than IRAs

(v) Treatment of repayments for distributions from IRAs

(D) Rules to account for investment loss

(g) Provision by Secretary of information relating to contributions

(h) Inflation adjustments

(1) In generalIn the case of any taxable year beginning in a calendar year after 2027, the $41,000 amount in subsection (b)(3)(A)(i) shall be increased by an amount equal to—

(A) such dollar amount, multiplied by

(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting “calendar year 2026” for “calendar year 2016” in subparagraph (A)(ii) thereof.

(2) Rounding

(Added Pub. L. 117–328, div. T, title I, § 103(a), Dec. 29, 2022, 136 Stat. 5279.)