A New Retirement Savings Option Is Coming. Here's Whether Trump's IRA Program Could Work for You

President Trump's administration recently announced a new retirement saving tool: the Trump Individual Retirement Account (IRA). There has been a lot of coverage for it, which might make you think you can set up a Trump IRA today, but you can't.

The announcement described the plan and announced its website, TrumpIRA.gov. (The website was not yet online as of this writing and is expected to be live in 2027.) But it will still take an act of Congress to bring the accounts to life. Still, it's worth looking at what has been proposed and whether it might help you.

Image source: The White House.

The Trump IRA proposal

Here's how the account is described on the White House website: "Tens of millions of Americans lack access to employer-sponsored retirement plans. Workers in small businesses, part-time workers, independent contractors, and self‑employed workers face unnecessary barriers to saving for retirement. My Administration intends to give these often-left-out American workers access to the same type of retirement-savings opportunities offered to every federal worker and to establish an easy and transparent way for eligible workers to obtain up to a $1,000 match for their savings."

The goal is worthy because many workers in America are unable to save for retirement via workplace-sponsored plans such as 401(k) accounts. Note, though, that those folks are generally eligible to save via traditional and Roth IRA accounts.

The fact that there's an available matching contribution from the government is also a very good thing. (Traditional and Roth IRAs don't feature matches, after all.) Still, the $1,000 match will only go to those with very low incomes:

• The full match is 50% of contributions up to $2,000, or $1,000.
• Single taxpayers with an individual modified adjusted gross income (MAGI) of up to $20,500 or joint filers with a MAGI of up to $41,000 qualify for the full match.
• Single filers with MAGIs between $20,500 and $35,500 qualify for a reduced match. Joint filers with MAGIs up to $71,000 can also qualify for a reduced match.

How the Trump IRA plan will work

The proposal essentially sets up an IRA marketplace (a bit like the Affordable Care Act's health insurance marketplaces) where anyone can view a range of available IRA accounts, which have no minimum initial investment requirement and feature low fees. The accounts listed at the website won't be any new kind of IRA, really -- they will still be traditional or Roth IRAs, offered by established financial companies, and meeting requirements such as low fees.

At the marketplace, low earners will be able see whether they qualify for the $1,000 match and how they can get it. (The $1,000 match is an idea that has been around a while. It stems from legislation passed in 2022 when Joe Biden was president, and it's been dubbed the "Saver's Match.")

The IRS offers a clue as to how the match can be claimed:

New saver's match for qualified retirement contributions starting with 2027 tax returns filed in 2028. Under the SECURE 2.0 Act of 2022, beginning with 2027 tax returns, the saver's credit will be replaced by a saver's match that will be deposited by the government directly into your retirement account. Starting with 2027 tax returns, Form 8880 will only be used to claim the saver's credit for ABLE account contributions. A new separate form will be used to claim the saver's match.

Don't confuse Trump IRAs with Trump Accounts!

There are now multiple financial accounts bearing the Trump name. Note that this proposal is not the same as the "Trump Accounts" (also known as "Baby IRAs"), which were introduced last year. Those target people younger than 18 and offer a tax-deferred way for them to get started saving for retirement -- very early.

It's super effective, whenever a young person socks money away for a future that's 40, 50, or even 60 years away, because that money has so much time in which to grow. A single $2,000 investment, for example, growing at, say, 8% for 50 years will grow to nearly $94,000. And if funds are added to the account over time, the sky's (almost) the limit!

Trump IRAs, unlike these Trump Accounts, are designed to help working-age adults, and especially those with low incomes.

Will a Trump IRA help you save for retirement?

The folks who will be most served by this new development are those who have very low incomes and who have not been able to put away much for retirement. There has been a tax credit for savers, but for those who have earned so little that they have had little or no federal tax due, the credit didn't help. This new approach can put money directly into their accounts.

Still, they will have to open one or more IRAs, and will have to manage contributing to their account(s) to get the matching contribution. That will likely be very difficult or even impossible for many low earners who are simply trying to stay afloat.

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