Here’s how Trump’s 401(k)-style retirement accounts could work

Jessica Hall

Fri, February 27, 2026 at 2:58 AM GMT+9 5 min read

President Trump unveiled a new retirement proposal during his State of the Union address Tuesday evening. - MarketWatch photo illustration/Getty Images, iStockphoto

During his State of the Union address Tuesday night, President Trump unveiled a proposal to create retirement accounts for people who don’t have one at their jobs — an idea that puts the issue of long-term financial health on center stage, but also raises more questions than it answers.

Read: Trump announces 401(k) plans with $1,000 match for workers whose employers don’t offer them

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During the address, Trump said the proposal would open access “to the same type of retirement plan offered to every federal worker.” Federal workers have Thrift Savings Plans, which offer access to low-fee funds that invest in stocks and U.S. Treasurys.

“That’s big — it’s such a powerful signal” to have the issue of retirement security discussed in the State of the Union address, said KC Boas, the retirement-savings initiative lead at the Aspen Institute Financial Security Program. “It’s recognition that people’s financial lives are going to be valued at that level. It’s all very encouraging.

“Of course, the devil is in the details,” Boas added. “It feels like there’s more work to do to understand how the match, the enrollment process and the user experience will work.”

About 56 million Americans lack access to a retirement plan through their employer, according to AARP.

The proposal would create automatic retirement accounts for uncovered workers beginning in 2027. The move “could significantly reduce the retirement coverage gap that affects tens of millions of low- and moderate-income workers,” Teresa Ghilarducci, an economist and New School professor who is an expert on retirement.

“Expanding access is a meaningful step,” Ghilarducci said. “For decades, Congress has tolerated a system in which nearly half of full-time workers and most part-time and gig workers lack access to a workplace retirement plan. Addressing that coverage gap is not trivial.”

The Trump plan appears to build on the refundable Saver’s Match enacted in recent federal legislation, Ghilarducci said. Unlike the existing nonrefundable Saver’s Credit — which provides little benefit to workers with low tax liabilities — the refundable match would be deposited directly into workers’ retirement accounts, she noted.

Some cautioned, however, that if the plan is integrated with the Saver’s Match — a federal matching contribution for low- to moderate-income workers that was part of that Secure 2.0 Act legislation — it could limit the number of people helped due to the income threshold.

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Meanwhile, the proposed Trump retirement accounts are expected to move with the individual if they change jobs, making it easier for people to manage.

The funding of the program and its $1,000 match also remain unclear, and it could be an expensive program to launch and sustain, critics said.

“We don’t see this happening,” Tobin Marcus, Wolfe Research’s head of U.S. policy and politics, told clients in a research note, describing the proposal as expensive and needing congressional approval.

But in an interview after Trump’s speech, Treasury Secretary Scott Bessent said the administration could accomplish this through the budget-reconciliation process, and that more details would be provided in the “coming weeks and months.” Budget reconciliation is a way to speed approval of certain spending, tax and debt-limit legislation with only a simple majority in the Senate.

Private philanthropists would be able to contribute to these retirement accounts under Trump’s plan, according to a White House official. “Trump accounts,” which are investment accounts for children under age 18 that offer $1,000 in seed money for babies born between 2025 and 2028, also have received philanthropic contributions.

While options exist already for individuals to open their own retirement plans through IRAs, people often get stymied by the administrative hurdles and their own inertia and fail to create such accounts, experts said. Workers without access to a workplace plan are 15- to 20-times less likely to save for retirement in any tax-preferred account, according to a White House official.

IRAs also lack the $1,000 match, Ghilarducci noted.

“The $1,000 matching contribution from the federal government is a game changer,” she said. “Matches for low-income workers significantly alter savings behavior. A small amount of financial assistance can encourage those previously excluded from wealth building to start saving, allowing the power of compound interest to work.”

The Trump plan would make it easier to sign up by allowing people to check a box on their tax forms to enroll, according to media reports.

The White House’s proposal in some ways mirrors bipartisan legislation already before Congress, including the Retirement Savings for Americans Act, sponsored by Sen. John Hickenlooper, a Colorado Democrat, Sen. Thom Tillis, a North Carolina Republican, Rep. Terri Sewell, an Alabama Democrat, and Rep. Lloyd Smucker, a Pennsylvania Republican.

Regardless of the White House’s moves, Americans still faces struggles in saving for retirement, experts said.

“The core weaknesses of the U.S. retirement system remain intact,” Ghilarducci said. “Social Security needs more revenue. Tax subsidies for retirement are regressive. Savings is voluntary. Defined-benefit pensions have eroded. Wages have stagnated. Workers are asked to shoulder market, financial and longevity risks that they are least equipped to manage.”

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