President Donald Trump signed an executive order on Thursday to introduce a government-sponsored retirement plan for the estimated 56 million Americans who cannot access a 401(k) or equivalent at work.
The order directs the launch of a new website, TrumpIRA.gov, that will provide eligible workers with a path to building retirement savings. In particular, the executive order noted that small business workers, part-time workers, independent contractors and the self-employed “face unnecessary barriers to saving for retirement.”
Starting next January, workers without retirement plans will be able to use the platform to research and enroll in portable, “high-quality, low-cost, independent IRAs.” The program is modeled after MyRA, the government-sponsored retirement account program established in 2015 under President Barack Obama. The Treasury canceled the MyRA program in 2017 during President Trump’s first term.
This new project has a few notable differences from the MyRA system, however. The latter had a maximum balance of only $15,000 and savers could only invest in US Treasury bonds that earned a yield of around 2%.
Employees signing up for retirement accounts through a Trump IRA next year will have more options. The executive order said it would provide “low-cost investments similar to those offered to Federal employees in the Thrift Savings Plan.”
The Thrift Savings Plan, or TSP, works basically like a 401(k) plan for government employees and members of the military. It allows employees to invest in a small selection of diversified, low-cost funds, including passive index funds and target date funds.
One of the biggest selling points of TSP is its very low cost. Charge rates – which cover administrative and financial management costs – range from 0.057% to 0.09%. In contrast, expense ratios for 401(k) mutual funds are 0.29% by 2024, according to the Investment Company Institute, an industry trade association.
Trump’s order states that the “gross in” fee on funds offered in Trump IRAs will be capped at 0.15%.
Free money for some workers, but details are sparse
As with other programs like TrumpRx.gov and Trump Accounts, the executive order left some details to the Treasury Department and Congress to finalize.
At a press conference accompanying the signing, Trump said the new platform will include the Saver’s Match program established by the SECURE 2.0 Act in 2022. Starting next year, the program will replace the existing “savings credit” in the tax code with a 50% contribution equal to $1,000 to IRAs for eligible employees.
Currently, Saver’s Match is aimed specifically at low-wage workers. A maximum of $1,000 is available for people earning up to $20,000 a year, while the benefit is reduced on an income-based scale that provides partial contributions for people earning up to $35,000.
And as with Trump Accounts, investment savings accounts that parents can open for children (and whose children born between Jan. 1, 2025, and Dec. 31, 2028 are eligible for a one-time $1,000 donation from the government), charities will be able to make contributions to employee accounts on their behalf.
The minimum wage raised doubts among many social media users, who pointed out that people earning less than $20,000 may struggle to contribute $2,000, the amount needed to get a full $1,000 match.
Others in the industry expressed more optimism, however. “A proposal that helps close the gap between those with employer-sponsored plans and those without is a meaningful step forward,” said Chris Spence, head of federal government relations and public policy at TIAA, in a statement.
When Trump first talked about the federal retirement plan in his State of the Union address earlier this year, Dan Doonan, executive director of the National Institute on Retirement Security, told Money that it was encouraging to see “broad, bipartisan support for expanding access to retirement savings.”
But how much of this plan can only be implemented by executive order remains to be seen. At a press conference Thursday, the president and director of the White House National Economic Council Kevin Hassett lobbied Congress to raise incomes to make more people eligible for the Saver’s Match. “To take it to the next level, we need congressional approval,” the president said.
