TrumpIRA.gov

As I reported in an earlier blog post , President Trump made a few enigmatic remarks in his 2026 State of the Union address about a new policy to establish “Trump retirement accounts.” These remarks were subject to various interpretations. Last Thursday, the Administration published an Executive Order and a fact sheet clarifying the confusion. They confirm the conjecture that the policy largely revolves around the Saver’s Match, already part of the bipartisan 2022 SECURE 2.0 retirement legislation, set to begin in 2027 and meant to encourage retirement savings among moderate-income workers. The Presidential publications also add a new element: the creation of TrumpIRA.gov, a government platform for private sector investment vehicles meeting certain criteria of type, low-cost, and other features, to invest the Saver’s Match.  The Saver’s Match is scheduled to largely replace the generally underutilized nonrefundable Saver’s Credit in 2027. Like the credit, availability of the match is limited to low- and moderate-income workers who are not dependents or full-time students and are at least 18 years old. Unlike the credit, it will not be subject to sharp cliffs of eligibility and amounts, will be available to those with no income tax liability, and will be directly contributed by the government through a claim by the individual on the tax return to designated traditional (not Roth) retirement accounts such as IRAs, 401(k)s, 403(b)s, and the like. Savers with modified adjusted gross incomes (MAGIs) below $20,500 ($41,000 for married filing jointly), to be indexed to consumer prices after 2027, will qualify for a 50 percent federal match on up to $2,000 in retirement savings (whether traditional or Roth), for a maximum match of $1,000. Those who earn up to $15,000 more than this threshold ($30,000 for marrieds) will qualify for a match rate gradually reduced to zero with increasing MAGI. Given the removal of the limitation of no refundability, the match will likely be used more widely than the credit, particularly by the lowest-income workers, who generally have no income tax liability. In 2022, only 5.7 percent of taxpayers claimed the credit, and the average credit was only $191. The new policy feature in the executive order is the creation by the Treasury Department, before January 1, 2027, of TrumpIRA.gov. This website is to provide individuals with information about financial institutions offering IRAs with investment options including life-cycle or target-date funds, balanced funds, and principal-protection funds, with overall net-expense ratios at or below 0.15 percent, and that do not impose minimum contribution or balance requirements. Another new feature is the direction to the IRS to provide guidance on the tax treatment of charitable contributions made by tax-exempt organizations to IRAs maintained by workers in particular charitable classes, so that the tax-exempt status of the contributing organization is not threatened. This latter provision echoes the recent success of large charitable contributions made by several wealthy individuals to Trump accounts established for children. The executive order also directs Treasury to develop legislative proposals, reportedly including to raise the match income threshold . Using the FINRA/Morningstar Mutual Fund Screener , I found that 141 of the 2215 target-date funds listed had an expense ratio of 0.15 percent or less (6.4 percent) and 23 of the 2231 balanced funds (1.0 percent) were low cost. Balanced funds are less represented because they are more likely to contain managed investments which are more expensive than indexed funds. Among money market funds, a quick internet search finds some below the expense cutoff. So at least among target-date investment funds the Administration may have a good choice menu on TrumpIRA.gov, although it is unknown if these same funds will meet the no-minimum balance and contribution restrictions for what initially will be small accounts.  It is unclear why the federal government needs to set up its own retirement fund platform. There are retirement clearinghouses in the private sector, and there are 17 states that have enacted state auto-IRA programs, which require employers without plans to automatically enroll their workers in the state program ; these programs currently hold $2.8 billion in assets in more than 1.2 million funded accounts. Also, the inclusion of low-return principal protection funds, which often invest mainly in Treasury bills, in the menu mix seems inconsistent with the stated goals of building wealth and “reaping the rewards of the vibrant American private-sector.”  More broadly, on a political level, both the creation of the Saver’s Match and now TrumpIRA.gov are missed opportunities to reform Social Security and put it on a sound financial footing, which a past Republican Administration, President George W. Bush’s, envisioned as including personal retirement accounts. Indeed, these and other piecemeal efforts, as well as Social Security itself, need to be part of a comprehensive review of retirement policy. The post TrumpIRA.gov appeared first on American Enterprise Institute - AEI .