56M US Workers Could Benefit From Trump's New 401(k) Plan With $1K Annual Federal Matching

President Donald Trump has moved to bridge the American retirement gap by proposing a state-backed 401(k) style plan for 56 million workers currently without workplace savings.

Unveiled during his State of the Union address on 24 February 2026, the initiative pledges a federal matching contribution of up to $1,000 per year for eligible savers.

Trump told a joint session of Congress the move targets the 'gross disparity' that leaves nearly half of the private-sector workforce unable to profit from record stock market highs.

'Half of all working Americans still do not have access to a retirement plan with matching contributions from an employer... all Americans can profit from a rising stock market,' Trump said.

According to the AARP nonprofit, low-income workers often lack access to workplace retirement savings plans, and 80% of workers without an employer-sponsored plan earn less than $53,000 per year.

New 401(k)s Could be Similar to Thrift Savings Plan

The Trump administration intends to launch a portable universal savings account for workers, which could work similarly to the Thrift Savings Plan (TSP) retirement accounts for federal employees. TSPs offer a government contribution match and access to low-cost, index-based investments.

While tax rules for the new accounts have yet to be disclosed, contributions could be made on a tax-advantaged basis if they follow a model similar to TSPs, which allow federal matching contributions of up to 5% of annual salary.

Furthermore, the $1,000 federal matching contributions could involve pairing the new accounts with the Saver's Match, a provision in Secure 2.0 that takes effect in 2027.

New Retirement Plan Could be a Game Changer

National Academy of Social Insurance's Jason Fichtener said that retirement experts are 'cautiously optimistic' that the new account offering people access to 401(k) style plans could be a game changer.

'We need to make sure it's additive and doesn't subtract from any of the other social welfare programs we have that help lower-income people,' Fichtner said.

Teresa Ghilarducci, a professor at The New School, said the new account would be a 'meaningful step to get universal coverage' for retirement savings. 'Many, many people who are left out of the system will start accumulating for retirement,' and can reap the rewards of compound interest, Ghilarducci added.

Allowing people left out of the system to accumulate retirement savings could also lower the government's financial burden.

A 2023 Pew Charitable Trusts research revealed that under-saving by workers could cost state and federal governments $1.3 trillion over two decades.

'Getting as many people as possible access to saving, automatically enrolling them, and having them just put that money away, is basically the key to mitigating this upcoming huge cost at the national federal level and the state level,' said Kim Olson of Pew Charitable Trusts.

Overall, lawmakers will have to consider new account features, such as portfolio diversification, provisions for outside contributions, and liquidity options for emergency withdrawals.

What Happens Next

While Treasury Secretary Scott Bessent has suggested the plan could be passed via budget reconciliation, it faces significant scrutiny in Congress over its funding and implementation. Critics, including analysts from the Cato Institute, have questioned the administration's fiscal authority to seed private accounts with taxpayer funds.

The Treasury Department is expected to release a detailed legislative framework in the coming weeks. If approved, the plan would likely focus on low-cost index-based investments to mirror the successful TSP structure.

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