WASHINGTON — President Donald Trump, during his 2026 State of the Union address, unveiled a sweeping proposal to create a new, portable retirement savings vehicle designed for the roughly 56 million Americans who currently lack access to employer-sponsored 401(k) plans.
The initiative, modeled after the Thrift Savings Plan (TSP) used by federal employees, aims to address a “gross disparity” in the U.S. financial system where nearly half of the private-sector workforce remains excluded from market-based wealth building. Under the plan, the federal government would provide a matching contribution of up to $1,000 annually for eligible workers, a move Treasury Secretary Scott Bessent suggested could be fast-tracked through the budget reconciliation process.
Closing the ‘Coverage Gap’
Despite a reported $30,000 increase in average 401(k) balances since the administration took office, recent data from the Economic Innovation Group (EIG) reveals a stark divide. Approximately 40.6 million full-time employees do not have access to any retirement plan through their employers.
The White House argues that the current system disproportionately benefits high earners while “leaving behind” low-to-moderate-income workers.
Target Demographic: Workers earning less than $35,500 (or $71,000 for married couples).
The Incentive: A 50% government match on the first $2,000 invested, totaling a $1,000 federal “top-off.”
Portability: Unlike traditional 401(k)s tied to a single employer, these accounts would follow the worker from job to job.
A Strategy for Reconciliation
The proposal arrives as the administration faces pressure to bolster economic sentiment ahead of the 2026 midterm elections. While a White House official noted that parts of the plan could be initiated via executive action, the funding for the $1,000 match requires congressional approval.
Treasury Secretary Scott Bessent confirmed to NBC’s Meet the Press that the administration is prepared to use reconciliation—a legislative maneuver requiring only a simple majority in the Senate—to bypass potential Democratic filibusters.
“This is the President coming back for working Americans,” Bessent stated. “We can do it through reconciliation… This is going to be a very big part of working Americans’ retirement program because there is a tremendous amount of financial insecurity.”
Mirroring the Federal Model
The “Universal Account” would provide private-sector workers with a menu of low-cost, diversified index funds similar to the TSP’s G, C, and S funds. By leveraging the scale of a federal-style system, the administration hopes to keep administrative fees significantly lower than those found in many small-business 401(k) plans.
The plan also builds upon the Saver’s Match provision of the 2022 SECURE 2.0 Act, which is slated to go into effect in 2027. The Trump administration’s proposal seeks to accelerate this timeline and broaden the infrastructure, ensuring workers without any existing account have an immediate place to save.
What’s Next?
The White House expects to roll out specific legislative language and enrollment protocols in the “coming weeks and months.” Critics, however, have already raised concerns over the long-term fiscal impact of the federal match and whether the plan offers enough protection against market volatility for low-income savers.
