Trump’s new $1,000 401(k) match plan: President Donald Trump used his record-setting one-hour, 47-minute State of the Union Address to unveil a sweeping retirement reform proposal: a government-backed 401(k) plan with up to a $1,000 annual match for workers who currently receive no employer retirement benefits. The announcement directly targets millions of “forgotten” American workers who lack access to employer-sponsored retirement plans. If implemented, the Trump 401(k) plan would expand savings access and tap into the federal Savers Match tax credit created under SECURE 2.0 Act, set to take effect in 2027.
Half of all working Americans — roughly 40.6 million full-time private-sector workers — have zero access to an employer-matched retirement plan, according to the bipartisan Economic Innovation Group. For part-time workers, that number jumps to 79%.
The median 401(k) balance among workers who do have a retirement account sits at just $40,000, according to the National Institute on Retirement Security. BlackRock CEO Larry Fink has warned that the average American would need around $2.1 million to retire comfortably — and “almost no one is close.”
This is the crisis Trump addressed Tuesday night.
“Half of all working Americans still do not have access to a retirement plan with matching contributions from an employer,” Trump said. He called these workers “often-forgotten Americans — great people, the people that built our country.”
According to federal labor data, nearly 57 million U.S. workers do not have access to a workplace retirement plan. At the same time, Federal Reserve surveys show roughly one in four non-retirees have no retirement savings at all. Trump’s proposal aims to close that gap by offering a federal match of up to $1,000 per year, mirroring the structure of the Thrift Savings Plan available to government workers. The White House says the goal is simple: ensure more Americans can “profit from a rising stock market” and build long-term wealth.
How the Trump 401(k) plan would work
Trump’s new retirement savings proposal centers on one core promise: a federal government match of up to $1,000 per year.Here is how the structure works. Workers contribute $2,000 of their own money annually. The federal government matches 50% of that — up to $1,000. The plan uses the existing “Saver’s Match” framework created under the SECURE 2.0 Act, signed into law in 2022. That matching mechanism is already set to take effect in 2028 under current law.
The accounts would be modeled after the Thrift Savings Plan — the retirement vehicle used by all federal government employees. That plan offers access to low-fee funds investing in short-term Treasuries and S&P 500 index funds.
The key difference from a traditional IRA? You would not need to proactively open an account. According to labor economist Teresa Ghilarducci of The New School — who is familiar with the plan — workers would simply check a box on their tax return to enroll. That single design change removes the biggest barrier stopping most low-income workers from saving: friction.
“This is a big deal,” Ghilarducci said. “It finally recognizes that most people don’t have anything saved for retirement, and they don’t save consistently.”
How does this differ from a standard 401(k)?
A traditional 401(k) is employer-sponsored. Your company sets it up, manages it, and decides whether to match. If your employer does not offer one, you are simply out of luck — until now.
Trump’s proposed plan is government-sponsored. It bypasses employers entirely. This matters enormously for gig workers, independent contractors, part-time employees, and workers at small businesses — all groups who are disproportionately shut out of employer-sponsored retirement savings plans.
It also matters for the roughly 38% of Americans who currently have no exposure to equity markets at all, according to Treasury Secretary Scott Bessent. “Over time, this is going to remedy that, so everybody will have a stake in our great, innovative economy,” Bessent said following the address.
Who qualifies for Trump’s retirement match?
The plan targets low- and middle-income workers without access to employer-based defined contribution plans. Full eligibility criteria have not yet been fully published. Treasury Secretary Bessent confirmed Tuesday night that the administration plans to release full details “in the coming weeks and months.”
Bessent also confirmed the plan could move forward through budget reconciliation — meaning it may not require a bipartisan majority in the Senate to pass.
Currently, the existing SECURE 2.0 Saver’s Match — which this plan builds on — is income-limited. Eligibility is determined based on prior-year tax returns. Starting in 2028, eligible individuals can receive a federal contribution of up to 50% on the first $2,000 contributed to a qualifying retirement account per tax year.
Trump also announced “Trump Accounts” for children
Alongside the 401(k) matching plan, Trump highlighted the “Trump Accounts” — also called the Invest America program — already established through the 2025 One Big Beautiful Bill Act.
These are tax-advantaged investment accounts for U.S. children under age 18. The Treasury Department provides a $1,000 seed deposit for every child born between January 1, 2025, and December 31, 2028.
Families can contribute up to $5,000 per year. Employers can also make contributions. Initial deposits become available on July 4, 2026.
The combined vision: retirement savings access from birth to old age, backed by federal matching dollars at every stage.
Why this retirement reform matters now
Retirement security has become a growing concern across the U.S. Rising living costs, longer life expectancy, and uncertainty around Social Security have intensified the need for personal savings.
Recent data shows that the median retirement savings for Americans aged 55–64 is under $200,000, far below what financial planners recommend for long-term security. Meanwhile, gig workers, part-time employees, and small business staff often lack employer-sponsored plans altogether.
By offering a federal 401(k) option with a guaranteed government match, the Trump 401(k) plan could significantly increase participation rates among workers historically left out of the retirement system.
Teresa Ghilarducci, a labor economist at The New School, described the proposal as a “big deal,” noting that many Americans struggle to save consistently. One notable feature under discussion would allow workers to opt in through a simple tax form checkbox — removing friction that often prevents IRA signups.
If you are among the 56 million workers currently without a retirement plan, this proposal is directly aimed at you. While the full rules are still being finalized, here is what to watch for.
First, confirm your eligibility based on income and employment status once the administration releases its full guidance. Second, understand that you would need to contribute $2,000 out-of-pocket to receive the maximum $1,000 federal match — so budgeting for that contribution matters. Third, consider that the investment options will likely be limited to low-fee index funds, similar to the Thrift Savings Plan.
Financial advisors broadly agree that any employer or government match is one of the most powerful wealth-building tools available. A $1,000 annual match compounded over 30 years at a 7% average return adds roughly $94,000 to a retirement account — before a single dollar of your own contributions is counted.
FAQs:
1. Who qualifies for the $1,000 government match under the Trump 401(k) plan?
Nearly 57 million U.S. workers currently lack access to an employer-sponsored retirement plan, according to federal labor data. The Trump 401(k) plan targets these workers, especially low- and moderate-income earners who contribute up to $2,000 annually to a qualified account. Eligibility will likely mirror the Savers Match income thresholds under SECURE 2.0, with the federal government depositing up to $1,000 directly into the worker’s retirement account starting in 2027.
2. When will the $1,000 401(k) government match start?
The $1,000 federal match is tied to the Savers Match provision scheduled to take effect in 2027. That means workers contributing to eligible retirement accounts could begin receiving direct federal matching deposits as early as the 2027 tax year. Implementation depends on administrative rollout and final regulatory guidance, but the statutory start date is already written into federal law.
3. Is the Trump 401(k) plan replacing Social Security benefits?
Social Security paid benefits to over 67 million Americans in 2025, and the Trump 401(k) plan does not replace those payments. Instead, it supplements retirement income by encouraging personal savings with a government match. The proposal adds another savings layer but does not reduce, privatize, or eliminate existing Social Security benefits under current law.
4. How is this different from a regular 401(k) or IRA?
Roughly one in four non-retirees has zero retirement savings, largely because they lack workplace access. Unlike traditional 401(k) plans that depend on employer sponsorship, the Trump 401(k) plan would provide a government-backed option with a guaranteed federal match of up to $1,000. Compared to a standard IRA, the key difference is the direct federal contribution, which increases total retirement savings faster for eligible workers.