Trump signs executive order expanding workers’ access to retirement plans

By Jeanne Sahadi, CNN

(CNN) — President Donald Trump signed an executive order Thursday that put some meat on the bones of a retirement savings proposal he introduced in his State of the Union address in February.

The proposal is intended to help close the so-called retirement coverage gap, which has left behind more than 50 million mostly low- and moderate-income earners in the private sector. They are the workers who have neither a defined-benefit employer pension nor an easy, subsidized way to save for retirement at work.

These workers include employees of small businesses, part‑time workers, independent contractors and self-employed workers. An estimated 78% of businesses with fewer than 10 employees do not offer an employer-based retirement plan, according to AARP. And nonwhite workers are among the most likely not to have access.

Trump said starting next year, workers will be able to access a website – TrumpIRA.gov – where they can open a “new, low-cost IRA account. You’ll then be able to access the same type of retirement accounts that federal employees enjoy through the Thrift Savings Plans,” Trump said.

“For millions of Americans who lack employer-sponsored plans, this will be really revolutionary, because they’ll be covered,” he added.

The executive order specifies that the IRA providers listed on TrumpIRA.gov must “maintain low administrative costs” where the overall annual expense ratio – including operating costs, management fees and and administrative expenses – may not exceed 0.15% of one’s account balance. The companies are also prohibited from imposing minimum-contribution or balance requirements.

Promoting the new Saver’s Match

Some earners who open an account will qualify for the federal Saver’s Match, which was passed by Congress during the Biden administration and goes into effect next year.

That match will be available to low- and moderate-income workers who make less than $35,500 (or $71,000 as a married couple) if they save up to $2,000 a year ($4,000 for couples) in a qualified retirement plan – like a 401(k), IRA or auto IRA. The federal match is worth up to $1,000 ($2,000 for couples).

Trump’s executive order directs the federal government to increase public awareness of the new Saver’s Match, which may indeed push eligible workers to save more. Last year, 87% of people without access to a retirement plan at work indicated they would be more likely to save if they could get that match, said Kim Olson, senior officer on the retirement savings project at the Pew Charitable Trusts.

At the signing event in the Oval Office Thursday, Trump and Kevin Hassett, director of the National Economic Council, said that the administration will work with Congress to expand eligibility for the match to those who make more than the current income limits.

The executive order also notes that the administration will recommend Congress “codify the policy set forth in this order so that workers lacking access to employer-provided retirement plans … have access to a retirement option with low fees, eligibility for the Federal Saver’s Match or other matching contributions, diversified index‑based investment options, automatic portfolio choices, and portability.”

It’s not yet clear just how how many of the more than 50 million people who are eligible to use TrumpIRA.gov will do so.

Ahead of the executive order, a new Morningstar analysis considered the impact of automatically enrolling eligible workers into a federally run plan. On net, the researchers estimated, “approximately 32.3 million workers would enter the retirement savings system under a federal auto-enrollment plan, even after accounting for opt-outs.”

But because the Trump plan is based on voluntary participation – Congressional authority is likely needed for anyone to be automatically enrolled – the number of workers likely to see their retirement savings go up as a result could be much lower than Morningstar’s estimate.

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