Federal government Secure 2.0 Act for gig workers

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Credit Sesame discusses the Secure 2.0 Act retirement law.

Without the workplace retirement plans that full-time employees are often offered, freelancers, gig workers and other types of contract workers are usually left on their own to save for retirement.

A new federal law is changing that by giving a “saver’s match” to help low- and moderate-income workers in the gig economy. The Secure 2.0 Act retirement law that was signed into law by President Biden in December provides for a direct government contribution to the retirement accounts of these nontraditional workers. However, this new savings option won’t start until 2027.

Until then, nontraditional workers are on their own. But they can save for retirement in other ways.

What happens in 2027?

The “saver’s match” incentive starts in 2027, replacing the Saver’s Credit of up to 50% of an IRA contribution. The maximum credit amount of the Saver’s Credit is $2,000 ($4,000 if married filing jointly), so with a 50% credit, up to $1,000 can be credited on a tax return (or $2,000 of married filing jointly).

The dollar amounts are the same in the new matching program, but instead of a tax writeoff the money goes into a workplace or individual retirement account, or IRA. Single filers who earn up to $35,500, and joint filers earning up to $71,000, qualify for at least a partial match.

A $1,000 deposit to your IRA from the federal government isn’t a huge bump to a retirement account, but the government hopes it’s an incentive for freelancers and others to start saving.

But what to do until this program starts in 2027? Here are some ways that nontraditional workers can start saving now for retirement.


The Simplified Employee Pension plan individual retirement account, or SEP-IRA, is one type of IRA that self-employed workers can contribute to. For 2023, a worker can contribute up to 25% of their net income (after expenses), or $66,000, whichever is less.

Roth IRA

If you’ve met income ceilings in other retirement vehicles, then a Roth IRA may work for you. Roth contributions aren’t tax deductible, but are tax-free at withdrawal if you’re 59-1/2 or older and the account has been open for more than five years.

The contribution limit for 2023 is $6,500 for workers under 50, and $75,000 at 50 and older.

Solo 401(k)

To lower taxes immediately, nontraditional workers can contribute to a Solo 401(k), which is meant for self-employed people. As a business owner, the self-employed can make contributions as an employer and employee.

As both an employer and employee for 2023, total contributions to this plan can be up to $66,000 if under age 50, and a catch-up contribution of an extra $7,500 if 50 or older. These limits apply across all 401(k) plans if you have a side gig, not each individual plan.

If you choose a traditional 401(k), your contributions are tax-deductible in the year they’re made. Distributions in retirement are taxed as ordinary income.

Health Savings Account

Freelancers must usually pay for their own health insurance. If you have a high deductible health insurance plan with an annual deductible of at least $1,400 per individual and $2,800 per family, then you’re eligible for a Health Savings Account, or HSA.

Pretax dollars can be put aside in an HSA to pay for out-of-pocket medical costs, including deductibles. An HSA can also be used as an investment vehicle.

At age 65, account holders can withdraw money in an HSA for any reason, and not just for medical costs. But only HSA funds used for qualified medical expenses aren’t taxed, while withdrawals for non-medical purposes are taxable.

In 2023, HSA contribution limits are $3,850 for individuals and $7,750 for family coverage. An additional catch-up contribution of $1,000 is allowed for anyone 55 or older.

Save through tax filings

Many nontraditional workers make quarterly estimated income tax payments, which can be a reminder to also add money to their retirement plans. 

Tax refunds can also be moved into an IRA. The Internal Revenue Service already allows taxpayers who are owed a refund to instruct the IRS to direct deposit the refund into a variety of accounts, including an IRA.

Join a union

Belonging to a trade or professional body such as a labor union or a chamber of commerce can allow nontraditional workers to join a group retirement plan. 

The Freelancers Union offers a retirement savings plan to its members, and the union is the largest organization representing the nation’s independent workers.

Automate savings

One of the best ways to save for retirement is to automatically transfer money from your paycheck or bank account to the retirement plan you’re funding.

Research by the Pew Charitable Trusts on retirement for nontraditional workers found that about half of those surveyed were interested in making automatic transfers from their bank account to a retirement account, saving through quarterly or annual tax filings, or using an app or website that facilitates automatic retirement saving.

Features that are easy to use may boost participation rates, the survey found. These include automatic enrollment, automated contributions, and auto-escalation of contribution rates.

Why nontraditional workers don’t save for retirement

If an employer offers a retirement plan, workers may be more likely to sign up than start saving on their own. But nontraditional workers who don’t have such a plan from their part-time employer had bigger issues stopping them from contributing — immediate needs and saving for emergencies.

The Pew survey found that 66% of nontraditional workers cited immediate needs and emergencies as the biggest ongoing challenge to saving for retirement. Job security and volatile incomes were other factors, with 15% of nontraditional workers having annual household incomes below $20,000. 

A survey of workers eligible to participate in OregonSaves, an auto-IRA program that started in 2017, found that the most common reason for not participating was that they “can’t afford to save at this time.” Saving for medical, auto or other financial emergencies was more important to them, and 79% wanted pre-retirement access to their savings.

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Disclaimer: The article and information provided here is for informational purposes only and is not intended as a substitute for professional advice.

Aaron Crowe
Aaron Crowe is a freelance journalist who specializes in personal finance topics. He has written for Wise Bread, AOL, AARP, Bankrate and other websites that focus on financial literacy and saving money. He has also worked as a newspaper reporter and editor. You can follow him on Twitter @AaronCrowe.

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