Millions of workers without access to 401(k)s or other workplace retirement plans could have a new way to invest and a government match of up to $1,000 a year under President Donald Trump’s proposal.
“Half of working Americans still don’t have access to a retirement plan with matched employer contributions,” President Trump said in Tuesday’s State of the Union address. “To address this egregious disparity, I am announcing that next year, my administration will give America’s often forgotten workers access to the same kind of retirement benefits available to all federal employees. We will provide contributions of up to $1,000 each year to ensure every American can benefit from the rise in the stock market.”
Approximately 56 million Americans do not have access to an employer-sponsored retirement plan at work, according to a 2025 study by the Pew Charitable Trusts, an independent nonprofit public policy organization.
It’s unclear exactly how Trump’s proposal will materialize or what form it will ultimately take. Treasury Secretary Scott Bessent suggested to reporters Tuesday that the bill could be passed through reconciliation. This is the same process that the One Big Beautiful Bill Act went through. The bill’s key provisions changed as the bill moved between the House and Senate.
How the new retirement account works
President Donald Trump delivers the first State of the Union address of his second term to a joint session of Congress at the Capitol in Washington, February 24, 2026.
Kenny Halston | New York Times | Via Reuters
The Trump administration’s plan would provide workers with universal savings accounts that they could take with them even if they changed jobs.
According to the White House, the new account will function similarly to a Thrift Savings Plan (TSP). TSP is a retirement savings and investment plan for federal employees that includes a government match and low-cost index-based investment options.
It is not yet clear how the proposed savings account would be taxed, but if it follows the TSP model, contributions could be made on tax-advantaged terms. Unlike traditional TSPs, where contributions count as income for upfront tax relief, Roth TSP investors can contribute after-tax funds and withdraw them tax-free at retirement.
Participants in current TSP plans receive matching contributions from the federal government equal to up to 5% of an employee’s salary.
White House officials said the $1,000 matching contribution in the president’s proposal could include a combination of new accounts with the Secure 2.0 provision, Savers Match, which goes into effect in 2027. Starting that year, workers below a certain income threshold can receive a 50% matching contribution from Uncle Sam on up to $2,000 a year in retirement savings.
Which workers are “left behind”?
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President Trump’s proposal is a “recognition of reality,” said Teresa Ghilarducci, a New School professor who co-authored a 2021 study with National Economic Council Director Kevin Hassett on providing retirement savings similar to thrift savings plans to low-income workers.
Mr Ghilarducci said the new account would be a “significant step towards universal coverage” for retirement savings.
“So many people who have been left out of the system will start saving for retirement,” Ghilarducci said, adding that they could benefit from compound interest.
Low-income workers often don’t have access to workplace retirement savings plans. Nearly 80% of workers without an employer-sponsored retirement plan earn less than $53,000 a year, according to AARP, a nonprofit, nonpartisan organization representing individuals age 50 and older.
An AARP study found that employees at small businesses are more likely to not have a retirement plan in place, as 78% of companies with fewer than 10 employees do not offer one.
Ghilarducci said many of these workers tend to be young, women or minorities.
According to AARP, approximately 63% of Hispanic workers, 52% of Black workers, and 44% of Asian American workers do not have access to retirement savings plans at work.
Key account details still to be determined
Retirement experts are “cautiously optimistic” that the proposal could be a game-changer in giving people access to 401(k)-style plans, said Jason Fichtner, a senior fellow at the National Academy of Social Insurance, a nonprofit, nonpartisan organization focused on strengthening Social Security programs.
The question is how the plan will work to ensure everyone has access, Fichtner said.
“We need to make sure it’s additive and not subtracted from other social welfare programs that help low-income people,” Fichtner said.
For example, some low-income Americans rely on Supplemental Security Income benefits. However, these beneficiaries face strict asset limits of $2,000 per individual and $3,000 per couple. Fichtner said new retirement accounts could be structured so that the assets held within them would not be subject to SSI limits, or that Congress could raise the bar through broader reforms.
“The most important thing our retirement system can offer people and families is an easy way to get started,” said KC Boas, Retirement Savings Initiative Leader for the Aspen Institute Financial Security Program, which focuses on helping people of all income levels achieve financial security.
He said lawmakers need to consider details about the new retirement account, including how to ensure portfolio diversification and whether it would allow outside contributions, similar to Trump’s children’s account. That’s in addition to basic questions like who the account is for, what features it has, and how the registration process and $1,000 match work.
Boas said people should also consider whether there is a liquidity feature that allows for emergency withdrawals alongside long-term savings.
“Too many retirement accounts are now being treated as de facto emergency savings vehicles, when in fact they are not,” Boas said. “And we know the impact it has on people’s retirement balances and the setbacks it can cause.”
Increased savings may reduce government burden
Experts say President Trump’s new retirement plan could leverage other efforts to encourage more workers to save for retirement.
Currently, 17 states have passed legislation offering automatic IRA plans that allow workers who don’t have a retirement plan to put money aside through their employer, said Kim Olson, senior retirement savings officer at Pew Charitable Trusts.
Of those programs, 15 are active, with Hawaii and Washington planning to launch programs this year and next, respectively, she said.
The federal government previously tried a savings plan called myRA, which allowed participants to participate in retirement plans through automatic payroll deductions. It closed in 2017 after 18 months. “It wasn’t given enough time to grow,” Olson said.
Bills proposed in Congress, such as the Americans Retirement Savings Act and the Automatic IRA Act, aim to make retirement savings more accessible to workers.
A 2023 Pew Charitable Trusts study found that workers’ lack of savings could cost state and federal governments $1.3 trillion over 20 years.
Olson said allowing employees to save a nominal amount of about $100 to $200 per month could help alleviate those costs. He said existing state programs have helped about 1.17 million savers accumulate nearly $2.8 billion in assets over the past eight years.
“Giving as many people as possible access to savings, automatically enrolling them, and letting them just keep that money is basically the key to mitigating the huge costs that are going to be incurred at the federal and state level going forward,” Olson said.
