Trump Floats New Government-Matched Retirement Plan in SOTU Aimed at Workers Without 401(k) Access

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In Tuesday night’s State of the Union address, President Donald Trump proposed a new 401(k)-style savings plan that would include a federal match of up to $1,000 a year for the 56 million workers who don’t currently have access to an employer-sponsored retirement plan.

The announcement targets a major gap in the retirement system: Nearly half of private-sector workers lack workplace plan access, according to a recent study from the Investment Company Institute (ICI), a trade association representing regulated investment funds.

Without a 401(k)-like plan, it’s harder for these workers to save through payroll deductions and take advantage of employer-plan tax benefits. And when it comes to retirement, that can mean less stability.

The most recent report from the National Institute on Retirement Security (NIRS) found that the lack of access for nearly half of workers remains one of the system’s biggest hurdles.

Trump said the new plan would be modeled on the Thrift Savings Plan, the federal government’s retirement program for its employees. The White House did not immediately provide details on eligibility, funding, or how the proposal would interact with provisions in the SECURE 2.0 Act that are scheduled to roll out in 2027 that will provide a similar $1,000 match for eligible workers.

What Trump proposed

While the details of his plan are murky, the president’s target was clear. Trump cast his proposal as a response to what he called a “gross disparity” between the roughly half of workers who can save through a workplace retirement plan and those who cannot.

As traditional pensions have waned, defined-contribution plans like 401(k)s have become the primary way many Americans build retirement savings. But access remains the sticking point: The NIRS study found that 80% of workers with a positive defined-contribution balance have that account through their main employer, underscoring that most people save in these plans only when their job offers one.

Survey data also backs this up. Nearly half of Americans with retirement savings in a 401(k) or similar account say they likely wouldn’t save for retirement otherwise, according to research from ICI.

“Workplace retirement plans are essential to helping Americans save for their future, thanks to key 401(k) features like payroll deductions, a broad range of funds to invest in, and tax advantages,” Shelly Antoniewicz, ICI chief economist, said in a press release. “These plans give Americans of all income levels the chance to invest and to control their investments.”

For workers who lack access, the alternative is often self-directed saving through an IRA or taxable account—options that can require more initiative and more financial savvy, which can pose a strong deterrent to investing.

Early reactions

Early response from the retirement industry was largely positive, with groups emphasizing the potential to widen access to workplace-style savings.

“The US voluntary retirement system is strong and access continues to expand. ICI looks forward to working with the administration to build on that strength—expanding access for all Americans and increasing choice within the proven employer-based system that serves tens of millions of workers well, with easily accessible IRAs available to self-employed workers,” said the ICI in a statement.

But the proposal also drew criticism, or at least skepticism, particularly over how closely it appears to track provisions passed in the SECURE 2.0 Act—a bill passed by Congress in 2022, that was strongly supported by then-President Joe Biden.

Part of that legislation authorized the Savers Match program, slated to roll out in 2027, which offers a $1,000 (or $2,000 for couples) match to eligible workers’ auto-IRA accounts. Workers will receive the funds in the form of a federal tax credit deposited by the Treasury into their retirement accounts.

Sound familiar? Senate Minority Leader Chuck Schumer thinks so, arguing in a post on X (formerly Twitter) shortly after the speech that Trump was repackaging a Biden-era accomplishment rather than breaking new ground.

“Trump hasn’t done anything for middle class Americans, so he has to steal Biden’s accomplishments,” read the post from the New York Democrat.

Fiscal policy analysts also questioned whether the White House can deliver a $1,000 federal match without Congress explicitly funding it, as it did in the SECURE 2.0 Act.

Romina Boccia, director of budget and entitlement policy at the Cato Institute, said in an emailed statement to MarketWatch that the proposal risks adding another layer of complexity to an already crowded savings system.

“Americans need a simpler system of tax-advantaged savings via universal savings accounts, not more tax-advantaged accounts (i.e., Trump accounts) or related handouts,” she said.