New Treasury Rules re: Undocumented Taxpayers

The National Association of Plan Advisors (NAPA) reports that the U.S. Treasury Department is set to promulgate rules barring undocumented taxpayers from participating in the "Saver's Match" program (and other federal tax credit programs).

Don't know what the Saver's Match program is? Yeah. Neither do I, and I've been trying to read up on it in order to explain it to you! Join the club.

Apparently, to understand Saver's Match you first have to understand the Saver's Credit. The Saver's Credit, according to the Congressional Research Service, is "a tax expenditure meant to encourage low- and moderate-income taxpayers to save for retirement." Also, "Few taxpayers claim the Saver's Credit, and the average credit is small."

The Saver's Match is set to replace the Saver's Credit in 2027. The idea is for the federal government to "match" retirement savings. From CRS, "Savers with modified AGIs below $20,500 ($41,000 for married filing jointly) will qualify for a 50% federal match on up to $2,000 in retirement savings—that is, a maximum match of $1,000."

In November, the Treasury Department announced that "refunded portions of certain individual income tax credits, including the Earned Income Tax Credit, the Additional Child Tax Credit, the American Opportunity Tax Credit, and the Saver’s Match Credit, are 'federal public benefits' within the meaning of PRWORA"--the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). This means that "illegal aliens and other non-qualified aliens would no longer be able to receive these benefits funded by the American taxpayer."

Sure seems like there's a law review article in here for someone who can explain finance.