During his State of the Union address this week, President Donald Trump said he intends to use existing administrative authority to establish a federal retirement savings option for workers who lack access to an employer-sponsored plan.
Under the proposal, the accounts, which experts say have a high likelihood of becoming a reality, could be structured like an IRA that could take either traditional tax-deferred or Roth treatment, as was proposed in this 2021 paper.
In a traditional tax-deferred account, contributions are generally made on a pre-tax basis and withdrawals are taxed as ordinary income. In a Roth account, contributions are made with after-tax dollars, and qualified withdrawals are tax-free.
The accounts would be paired with a refundable federal Saver’s Match beginning in 2027, with the government depositing the match directly into workers’ retirement accounts rather than offering a nonrefundable tax credit.
The structure would resemble the federal government’s Thrift Savings Plan, which serves roughly seven million federal employees and service members.
President Trump is proposing a government-run retirement savings option, paired with a refundable federal match, to close the coverage gap affecting tens of millions of workers.
In response, the Wealth Equity Lab at The New School for Social Research said the action could meaningfully reduce the retirement coverage gap, which affects at least 54 million U.S. workers.
In an interview, Lab Director Teresa Ghilarducci called the proposal “one of the more substantial administrative interventions in recent decades” to address what she described as a persistent coverage failure in a “deeply flawed” retirement system.
Ghilarducci said she was struck by how directly the president framed the issue in his State of the Union.
The president “went right to the heart of the matter” by acknowledging that many workers have not benefited from decades of stock market gains because they simply lack access to retirement accounts, she said.
For Ghilarducci, the appeal of Trump’s proposed retirement account is structural.
“It’s everything I wanted except automatic enrollment and a federal contribution that doesn’t depend on a low-income worker putting something in,” she said.
Because the refundable Saver’s Match is already set to take effect in 2027, she called the executive action “a really brilliant way to have structured this” using existing authority.
How Trump’s government-run retirement account proposal would work
The executive action appears to build on the refundable Saver’s Match enacted in recent federal legislation.
Unlike the existing Saver’s Credit, which is nonrefundable and often unusable by lower-income workers with little tax liability, the new match would be refundable and automatically deposited into a retirement account. It would equal 50% of the first $2,000 contributed, up to a $1,000 match, subject to income phaseouts.
Ghilarducci said the accounts are likely to resemble the Obama-era MyRA program, which ended in 2017, but with a crucial difference: the refundable match. “Obama did not have the refundable tax credit,” she said. “That’s what Trump has going for him.”
Also worth reading
- Retirees may want to rebalance as markets broaden, volatility rises
- Why “breaking even” on Social Security is the wrong goal
- The $83,250 secret every solo entrepreneur needs to know for 2026
- Medicare mistakes seniors wish they’d known sooner
- Elon Musk says stop retirement saving: Experts call it ‘nonsense’
She expects the accounts would likely be structured as Roth-style vehicles and opened at tax filing. A worker without access to a 401(k) could check a box on a tax return to open an account and direct part of a refund into it. Lower-income filers eligible for the match would see federal dollars deposited directly into their accounts.
According to the Wealth Equity Lab, the proposal shares structural elements with the bipartisan Retirement Savings for Americans Act, sponsored by Sens. John Hickenlooper (D-Colo.) and Thom Tillis (R-N.C.), as well as Reps. Terri Sewell (D-Ala.) and Lloyd Smucker (R-Pa.).
That legislation would mandate broader automatic enrollment and provide a more generous and progressive federal match.
Why the Lab supports the federal retirement savings option
Ghilarducci said the core problem is access. “We knew a long time ago that [401 (k)s] were not going to spread past 50% of the workforce,” she said, adding that tens of millions of workers are now reaching retirement “without the money they thought they would have.”
About 42% of full-time workers and 79% of part-time and gig workers lack access to a workplace retirement plan, according to the Lab. At the same time, more than $400 billion in annual retirement tax expenditures disproportionately benefit higher-income households. The United States also has the highest old-age poverty rate in the G-7 at 22.9%.
“This only covers maybe a quarter to maybe half,” she said of the current proposal, but called it a meaningful step toward closing the gap.
What’s still missing from the White House retirement account plan
Despite her support, Ghilarducci said the executive action leaves major weaknesses untouched.
“What’s missing is all low-income workers being able to participate,” she said, noting that the Saver’s Match eligibility is limited and does not capture much of the lower middle class. She also wants a baseline federal contribution, such as the 1% automatic deposit included in the Retirement Savings for Americans Act, that does not depend on workers contributing first.
And she emphasized that no savings account can substitute for Social Security. “We actually need some action on getting more revenue into Social Security,” Ghilarducci said. “There’s no way private savings can account for a 25% drop in Social Security.”
Others caution that the success of the proposal will hinge less on its announcement and more on its design.
For his part, Jack VanDerhei, director of retirement studies at the Morningstar Center for Retirement & Policy Studies, wrote in a LinkedIn post that whether the proposal meaningfully improves retirement outcomes “will depend far more on implementation than on the headline number.”
From a modeling perspective, he said several questions immediately arise.
- Coverage: Who is truly “newly covered,” and how many of them will actually participate?
- Take-up mechanics: “The difference between opt-in and auto-enrollment is not marginal — it is decisive,” VanDerhei wrote.
- Contribution behavior: Will participants contribute only enough to capture the match? Is there auto-escalation? And how persistent will contributions be over time?
- Governmentfiscal considerations: A $1,000 match across millions of workers would translate into a multi-billion-dollar annual commitment. Policymakers will need to consider the cost per dollar of additional retirement wealth generated.
- Substitution effects: Does the program increase net retirement saving, or does it partially crowd out employer plan formation or other savings vehicles?
In short, while Ghilarducci views the proposal as a potential “policy opening,” VanDerhei suggests its ultimate impact will depend on whether it changes behavior in durable ways — and at what cost.