Trump’s Retirement Account Push Builds on Growing State Plans

The Trump administration’s push to expand individual retirement account access to more workers without an employer-sponsored plan could reach beyond a patchwork of existing state programs.

However, the federal program will initially leave behind some of the key features offered in many states.

The Treasury Department is working on an executive order from President Donald Trump to establish a federal portal for workers to invest in private-sector IRAs, with certain low-income savers additionally eligible through a separate program for a government match of up to $1,000.

The creation of a federal hub comes as state-level retirement programs are gaining momentum. Twenty-two states have enacted programs aimed at providing retirement coverage for private-sector workers who don’t have a plan through their employer. A majority of those are auto-IRA programs, where eligible individuals are automatically enrolled in a retirement savings account and can opt out or change their contribution.

Retirement experts point to the state initiatives, as well as the federal push, as a positive step toward encouraging retirement savings among the more than 50 million workers who do not have access to an employer-sponsored plan. The federal program will be able to reach workers nationwide, while the state programs could also provide a blueprint for the federal government, experts said.

“These programs demonstrate that when you combine easy access with automatic enrollment, workers choose to save and participation significantly increases,” said Angela Antonelli, executive director at the Center for Retirement Initiatives at Georgetown University. “The administration has a real opportunity to build on this experience as it designs the Trump IRA in a way that complements and supports existing state efforts and makes sure eligible workers can benefit from the Saver’s Match launching in 2027.”

The Biden-era Saver’s Match program set to go into effect next year will provide an added incentive for certain low-income individuals. The nationwide program uses government funds to match 50% of retirement contributions, up to $1,000. Individuals earning less than $35,500 and married couples earning less than $71,000 are eligible for the match beginning next year.

There are some similarities between the Trump administration’s IRA push and state-facilitated retirement initiatives. Both types of programs target workers without employer-sponsored plans, and both will offer low-cost, private-sector plans. State programs could offer a guide for setting up a marketplace, choosing vendors, and which types of programs garner the most participation, retirement experts said.

‘Different Playgrounds’

The Trump IRA program won’t be able to replicate some state-level features without action from Congress. The biggest is that the federal government cannot enact automatic enrollment for retirement plans without legislation, so participants will have to seek out the TrumpIRA.gov website when it launches in January.

KC Boas, retirement initiative lead at the Aspen Institute Financial Security Program, said state programs often offer alternative Roth IRA options, which may not be possible for the government program since Trump’s executive order stipulated any plans offered through the federal portal must be compatible with the Saver’s Match, which would mean a traditional IRA. A Roth IRA allows users to make tax-free withdrawals in retirement.

“There are ways for TrumpIRA.gov to still embrace some of the behavioral learnings from those state plans, even in a marketplace setting,” Boas said. “But step one is just acknowledging how these are fundamentally different playgrounds that we’re working in.”

The state program that is most similar to what the Trump administration is expected to offer is the one Washington launched in 2018. The state’s department of commerce provides a retirement marketplace where financial services companies offer low-cost retirement plans to businesses with less than 100 employees. The program is voluntary and requires participants to opt-in.

In a sign of the shift toward automatic enrollment, Washington in 2024 passed legislation to create an auto-IRA program that is scheduled to launch next year.

“The lesson from Washington is that a marketplace should be seen as part of the infrastructure, but not the whole solution,” said Jonathan Herrera, program manager for the state’s retirement program, Washington Saves.

State Momentum

State-facilitated retirement programs have picked up steam in recent years, with the potential for more action on the horizon.

As of the end of April, 22 states have enacted some type of initiative aimed at getting workers without employer-sponsored plans to save for retirement, according to the Center for Retirement Initiatives. Fifteen are auto-IRA programs where employees without an employer-sponsored plan are automatically enrolled in an IRA at a default contribution amount. Others are voluntary and offer exchanges and marketplaces for employers and workers to find retirement account options. Washington and Hawaii are preparing to implement auto-IRA programs after adopting legislation to do so.

Voters in Philadelphia approved a ballot measure last month making it the first city to enact an auto-IRA program for workers without an employer-sponsored plan.

State-facilitated retirement programs have accumulated more than $3 billion in total assets and more than 1.2 million funded accounts among participants as of April 30, according to the Center for Retirement Initiatives. The center found it took less than two-and-a-half years for the assets in the programs to grow from $1 billion to $3 billion. Several states yet to adopt similar retirement account programs have seen legislation put forward to do so, including Pennsylvania and North Carolina.

Mark Iwry, a former Treasury Department official and nonresident senior fellow at the Brookings Institution who helped craft early state-led retirement initiatives, said the auto-IRA concept “occupies the policy sweet spot” for workplace saving programs.

“The auto IRA model, state- and federal-based, is the natural destination for the current administration’s stated buy-in to the longstanding goal of expanding retirement coverage for the many millions of workers who lack employer plans,” Iwry said.