How Trump's New Retirement Plan Might Work

"The administration is still working out what they want to propose — in addition to the two existing provisions: the recently enacted Trump Accounts for kids and the saver's match," Mark Iwry, a former senior advisor to the Treasury secretary on retirement policy told ThinkAdvisor.

Iwry, who's now a nonresident senior fellow at the Brookings Institution, talked with ThinkAdvisor about how the idea for a new retirement plan came about and how the accounts may likely work.

THINKADVISOR: So Trump's newly proposed retirement plan would be an extension of the Trump Accounts?

IWRY: My sense is that much of the impetus for the new elements grew out of a desire to expand on the Trump Accounts for kids by creating "Trump accounts for grownups."

THINKADVISOR: Where did the idea for Trump Accounts and for the Saver's Match come from?

IWRY: Actually, neither one was originally the current administration's idea. The idea of "kids' accounts" or "baby bonds" has been researched, discussed and debated for decades, including pilot projects, some state-level accounts, and a version in the U.K., which was discontinued.

These IRA-like savings accounts for newborns were enacted in the July 2025 budget reconciliation legislation, naming them "Trump accounts."

THINKADVISOR: Could you explain the $1,000 match Trump referred to in his speech?

IWRY: When Trump promised a match of up to $1,000 on savings, to begin in 2027, he apparently was buying in to the "saver's match" — a government matching deposit of up to $1,000 per person per year for lower-and moderate-income savers who contribute to plans or IRAs.

I originally co-authored this with a couple of colleagues at the Treasury Department in 2000 and named it the "saver's credit."

Congress enacted a truncated version, but the credit has still been claimed annually by as many as 10 million savers. Eventually, the 2022 bipartisan Secure 2.0 legislation expanded it, effective 2027, to reflect our original proposal, renaming it the "saver's match."

So IRS has been required by law to implement the match Trump promised in his speech (and he presumably can't expand it without legislation). Ironically this administration apparently has been relegating the very important preparations for saver's match implementation to the back burner behind their top priority, Trump Accounts.

It is gratifying that this president seems, based on his recent speech, to be buying into our longstanding goal of dramatically expanding retirement coverage for the tens of millions of workers currently ineligible for employer plans. But of course the proof will be in the specifics, which are still unclear.

THINKADVISOR: How would the new retirement accounts that Trump mentioned in his State of the Union speech work?

IWRY: The branding of "Trump Accounts" seems to have gone over so well in this administration that they're now looking to create "Trump Accounts for grownups."

Yet most advisors and others believe that whatever reform the retirement system needs, it probably does not include more proliferation of new types of individual tax-favored accounts with different names and rules to keep track of.

That's why the automatic IRA legislation (federal or state) to expand coverage creates new savers by auto enrollment into private-sector-managed IRAs (which is also indirectly encouraging formation of new 401(k) plans) rather than devising yet another new type of account.

So a new element this administration has been considering in connection with expanding Trump Accounts is something like a clone of the existing federal 401(k)-type plan – the "Thrift Savings Plan" or "TSP" — that covers federal government workers.

For many years, some have regularly asked why not model a coverage-expanding solution based on the TSP. Effectively the largest safe harbor 401(k)-type plan in the world, the TSP covers some 7 million federal government employees and retirees, has a meaningful employer contribution, and charges famously low fees. But over the years the idea of opening the TSP to all uncovered workers has gone nowhere.

THINKADVISOR: Why?

IWRY: Each time this idea has been reproposed over the past quarter century, TSP management have emphasized that the TSP's systems simply cannot be expanded to add millions of participants under a "TSP-for-all." And while the TSP is an excellent 401(k) type plan, many people wonder why reinvent or clone it when there are now many private-sector 401(k) and other plans that are as good or better.

The 401(k)/employer plan industry has consistently opposed a 401(k) "public option" for fear that it could unfairly compete with the private sector by encouraging employers to drop or avoid adopting plans while inviting employees to join the TSP instead. Yet nonetheless, the administration reportedly has been lobbied hard to adopt some form of "TSP for all."

In contrast, no such concerns are raised by the private-public automatic IRA programs in 17 states and the proposed nationwide auto-IRA federal legislation, which complement and enhance the private pension system, and are even spurring a significant uptick in 401(k) plan formation.

THINKADVISOR: Would creating any new types of accounts require legislation?

IWRY: Normally yes. But this administration reportedly is considering avoiding Congress, perhaps by resurrecting the myRA.

I developed the myRA — for rather different reasons — with my team during the Obama era by regulation under Treasury's existing authority to issue Treasury securities. I intended the myRA not as an overall solution to the coverage gap but as a strategy targeted to the most risk-averse nonsavers: a riskless, no-cost, 21st century U.S. savings bond held in a Roth IRA as a comfortable "gateway drug" to induce a lifelong habit of saving.

But the first Trump administration killed the myRA when they learned we'd planned to use it to support the state auto-IRA programs, which they also opposed. Now the current Trump administration may be considering whether they could stretch this authority enough to create not only myRA savings bonds but also other TSP-for-all type investment accounts.

THINKADVISOR: Will new Trump retirement proposals be easy to pull off?

IWRY: Major progress can be achieved without reinventing (or mis-inventing) the wheel.

Rather than possibly trying to aggressively stretch the Treasury securities authority in an attempt to clone the TSP, we could instead work with and build on existing features and pursue well-considered solutions.

Trump's rhetoric might suggest he has bought into — or would accept — the need for some reasonable kind of employer requirement to help workers save from their own paychecks to finally address our nation's major retirement coverage gap. He could do so by endorsing the state-based auto-IRAs and proposed federal auto-IRA legislation, which impose a requirement that is costless for employers while protecting and supporting the employer plan system.