Trump Targets 401(k) Gap With Savings Plan for Uncovered Workers

Millions of private-sector workers without employer-sponsored retirement savings plans could gain access to new tax-advantaged plans similar to one in place for federal workers, President Donald Trump pledged in his State of the Union speech Tuesday night.

The new 401(k)-type plan would be modeled after the low-fee federal Thrift Savings Plan, or TSP, to remedy what Trump termed “the gross disparity” between the roughly 50% of the population who have access to workplace retirement savings plans and those who do not. Workers could get a matching contribution from the government of as much as $1,000 a year.

It wasn’t immediately clear how much of the plan would deviate from a measure already set to take effect next year under a law passed under former President Joe Biden’s administration. Trump is planning to change the program to some extent, but details weren’t available.

The Insured Retirement Institute said in a statement that it was “encouraged” by the president’s comments but “eager to learn more details.” Senate Minority Leader Chuck Schumer accused the president of simply repackaging the Biden-era program.

“Trump hasn’t done anything for middle class Americans, so he has to steal Biden’s accomplishments,” the New York Democrat said in a social media post.

Some 56 million private-sector employees work for companies that do not offer an employer-sponsored retirement savings plan, according to AARP. A White House official said Trump’s program offered a government match, portfolio choices and index-based investment options that could help workers who have been overlooked to build retirement savings.