Trump pitches new retirement plan with a federal match. Who may benefit
Millions of workers without access to a 401(k) or other workplace retirement plan could get a new investment method and up to $1,000 in annual government assistance under a proposal from President Donald Trump.
“Half of working Americans still do not have access to a retirement plan that matches contributions from an employer,” Trump said in his State of the Union address on Tuesday. “To address this gross inequality, I am announcing that next year my administration will give these oft-forgotten American workers access to the same type of retirement plan offered to every federal employee. We will match your contribution up to $1,000 each year to ensure that all Americans profit from a rising stock market.”
Approximately 56 million Americans do not have access to an employer-sponsored retirement plan at work. According to 2025 research from the Pew Charitable Trusts, an independent public policy nonprofit.
It is unclear exactly how Trump’s proposal will be implemented and what its final form will be. Treasury Secretary Scott Bessent speaking to reporters on Tuesday recommended The law could be passed by compromise; It’s the same process that the Big Beautiful Bill went through. Key provisions of this legislation changed as it passed between the House and Senate.
How will new retirement accounts work?
President Donald Trump delivered the first State of the Union address of his second term to a joint session of Congress in the House Chamber of the Capitol in Washington on February 24, 2026.
Kenny Holston | New York Times | via Reuters
The Trump administration’s plan would provide workers with a universal savings account that would be portable if they change jobs.
New accounts will work like this: Savings Savings PlanTSP, a retirement savings and investment plan for federal employees that includes a government match and low-cost, index-based investment options, according to the White House.
It is not yet clear how the proposed savings accounts will be taxed, but tax-advantaged contributions could be made if they follow the TSP model. In a traditional TSP, contributions count against income for an up-front tax deduction, while investors in Roth TSPs contribute after-tax money and can withdraw money tax-free in retirement.
Current TSP plan participants receive contributions from the federal government equal to 5% of the employee’s salary.
The $1,000 matching contributions in the president’s proposal could include matching new accounts with Saver’s Match, a provision in Secure 2.0 that would take effect in 2027, according to White House officials. Starting that year, workers below certain income thresholds will be able to earn a 50% contribution of up to $2,000 in annual retirement savings from Uncle Sam.
Which workers are ‘left out of the system’
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Teresa Ghilarducci, a professor at The New School who co-authored 2021, said Trump’s offer was “a recognition of the truth.” research We spoke with National Economic Council Director Kevin Hassett about providing low-income workers with retirement savings similar to the Thrift Savings Plan.
Ghilarducci said the new account would be “a meaningful step toward universal coverage” for retirement savings.
“A lot of people who are out of the system will start saving for retirement,” Ghilarducci said, and they will be able to reap the rewards of compound interest.
Low-income workers often lack access to workplace retirement savings plans. Nearly 80 percent of workers without an employer-sponsored retirement plan earn less than $53,000 per year AARPA nonprofit, nonpartisan organization representing individuals age 50 and over.
Employees at small businesses are more likely to not have a workplace retirement plan, as 78% of businesses with fewer than 10 employees do not offer this benefit, according to AARP research.
Many of these workers are young, women or minorities, Ghilarducci said.
According to AARP, approximately 63% of Hispanic workers, 52% of Black workers and 44% of Asian American workers lack access to a workplace retirement savings plan.
Important account details have not yet been determined
Jason Fichtner, senior fellow at the National Academy of Social Security, a nonprofit, nonpartisan organization focused on strengthening social insurance programs, said retirement experts are “cautiously optimistic” that the proposal could be a game changer to help people access 401(k)-style plans.
The question is how to make the plan work so that everyone can access it, Fichtner said.
“We have to make sure that this contributes and doesn’t detract from any of our other outreach programs that help low-income people,” Fichtner said.
For example, some low-income Americans rely on Supplemental Security Income benefits. But these beneficiaries face Strict asset limits of $2,000 per individual and $3,000 per married couple. Fichtner said the new retirement accounts could be structured so that the assets held within them do not apply to SSI limits, or Congress could raise those thresholds through broader reform.
“The most important thing you can give people and families in our retirement system is an easy way to get started,” said KC Boas, retirement savings initiative leader for the Aspen Institute’s Financial Security Program, which focuses on helping people at all income levels achieve financial security.
With new retirement accounts, he said, lawmakers should consider details like how to ensure portfolios are diversified and whether to allow outside contributions, as with Trump’s accounts for children. That’s along with basic questions about who the accounts will belong to, what features they might have, and how the registration process and $1,000 match will work.
They should also consider whether there will be a liquidity feature that will allow emergency withdrawals as well as long-term savings, Boas said.
“Many retirement accounts today are effectively viewed as emergency savings vehicles, but they are not,” Boas said. “And we know the impact this can have on people’s balance in retirement and the disruption this can cause.”
Expanding savings could reduce government burden
Trump’s new retirement plan could benefit from other efforts to encourage more workers to save for retirement, experts say.
Fifteen of those programs are active, he said, with Hawaii and Washington expected to launch their programs this year and next year, respectively.
The federal government has previously tried a savings plan called myRA, which allows participants to participate in a retirement plan through automatic payroll deductions. This was closed after 18 months in 2017. “It wasn’t given enough time to develop,” Olson said.
Bills proposed in Congress, including the Retirement Savings for Americans Act and the Automatic IRA Act, aim to make retirement savings more accessible to workers.
2023 Pew Charitable Trusts to work It found that inadequate savings by workers could cost state and federal governments $1.3 trillion over 20 years.
Allowing workers to save a nominal amount of around $100 to $200 per month could help reduce those costs, Olson said. To date, existing government programs have enabled about 1.17 million savers to accumulate close to $2.8 billion in assets over the past eight years, he said.
“Giving as many people access to savings as possible, automatically enrolling them and having them put that money aside is the key to reducing this huge cost that’s coming up basically at the national federal level and the state level,” Olson said.
