President Donald Trump announced a new retirement plan for American citizens during his State of the Union address to Congress, unveiling a design that would significantly expand access to retirement savings.
Under the new 401(k)-style retirement plan, the Trump administration would offer up to $1,000 a year to millions of workers who currently lack employer-sponsored retirement plans.
“My administration will give these forgotten American workers, great people, people that built our country, access to the same type of retirement plan offered to every federal worker…We will match your contribution with up to $1,000 each year,” Trump said.
What is 401(k) retirement plan?
A 401(k) is a defined-contribution retirement plan for private sector employees that allows employees to direct a portion of each pay check into an investment account. In many cases, employers match some or all of the employee’s contributions.
Participants can select how their money is invested from a menu of options provided by the employer. These typically include stock and bond funds, mutual funds, and target-date funds that automatically adjust to become more conservative as retirement nears, helping to manage investment risk over time.
The plan gets its name from the Section 401(k) of the US Internal Revenue Code.
How would Trump’s new retirement plan work?
The Trump administration has proposed to provide a universal savings account to workers, which would be portable if they switch jobs. Further details on the proposed accounts and how they will be taxed remain to be seen, according to CNBC.
How many Americans do not have access to 401(k)?
Roughly 56 million Americans lack access to an employer-sponsored retirement plan at work, according to 2025 research from the Pew Charitable Trusts, an independent public policy non-profit.
Citing those figures, Trump highlighted what he characterised as a significant retirement savings shortfall. He said that about half of working Americans do not have access to a formal retirement plan or to employer-sponsored matching contributions, according to a report by Fortune.