Saving for retirement is key to enjoying truly golden years. The Trump administration has officially launched a new savings option, dubbed the Trump IRA, for workers who don’t have a workplace retirement plan.
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Noting that tens of millions of Americans lack access to employer-sponsored retirement plans, the Trump administration today officially launched its answer, the Trump IRA.
Donald J. Trump teased the new retirement plan during his Feb. 24 State of the Union address. More information was provided in today’s Executive Order.
The EO calls for the establishment by Jan. 1, 2027, of a special TrumpIRA.gov site for the accounts.
That online clearing house will provide information about high-quality, low-cost private-sector IRAs, with a “particular focus on independent contractors, self-employed individuals, and other workers who do not have access to an employer-sponsored retirement plan.”
“Beginning at the start of next year, every American will be able to go to TrumpIRA.gov and open a new low-cost IRA account,” Trump said during this afternoon’s EO signing ceremony at the White House.
Government match for new IRA: Once an eligible Trump IRA is created, its owner will qualify to obtain a federal match of up to a $1,000.
That part of the EO answered questions some of us (like me in my earlier Trump IRA post) had about how the new Trump retirement savings vehicle would work with the existing Saver’s Credit.
That tax credit, worth the $1,000 cited in the Trump IRA EO, is available to certain individuals who contribute to IRAs or workplace plans. The Saver’s Credit is slated, under a provision of the Setting Every Community Up for Retirement Enhancement (SECURE) 2.0 Act, to become the Saver’s Match in 2027.
That’s the same year the Trump IRA will become available. And the Saver’s Match that year will remain.
In fact, today’s EO calls for efforts to “increase public awareness” of the upcoming Saver’s Match, as well as “facilitate participation in eligible retirement-savings vehicles that provide diversified, index-based investment options.”
Comparison to TSP: Trump likened his upcoming eponymous retirement savings option to the Thrift Savings Plan (TSP) currently available to federal government workers.
Uncle Sam’s defined contribution retirement offering to his workers is praised for its low administrative fees, simple investment options, and generous 5 percent potential employer match.
Obviously, the Trump IRA will not meet all those standards. Right now, it is focusing, like the TSP, on “high-quality, low-cost IRAs.”
The administration also is reportedly considering broadening the Trump IRA program to automatically enroll workers who aren’t covered by workplace retirement plans.
And there are indications that the White House would like Congress to consider broadening access to the Saver’s Credit/Match by increasing its inflation-adjusted income limits.
All retirement savings help welcome: Even without expansion of the nascent Trump IRA, anything that broadens retirement savings options to more people is welcome.
And I’m hoping this new option will be more successful than myRA. Trump shut down myRA in 2017, saying limited participation didn’t merit the program’s cost to taxpayers.
Whether Trump IRAs will attract more interest remains to be seen. But there is a need for more of us to take charge of how we will pay for our post-work years.
Currently, nearly half of American employees in the private sector — roughly 56 million — do not have access to either a traditional pension or a retirement savings plan at work, according to AARP.
Those individuals eventually will be more reliant on Social Security. And that federal retirement program also is facing its own challenges.
Act now, before Trump IRA: Right now, if you do have a workplace retirement plan, participate or increase your contributions as much as your personal budget will allow. As noted, these amounts could get eligible workers this tax year more savings via the current Saver’s Credit.
Also consider bulking up your retirement savings by opening an IRA, either a traditional one that could get you a tax deduction or a Roth IRA that will provide tax-free withdrawals when you do retire. Again, contributions to either type of IRA could qualify for the Saver’s Credit.
If your company doesn’t have a retirement plan, definitely look into an IRA. And get ready to check out your added post-work savings options when the Trump IRA is available.
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