A New Benefit to Consider This Fall
Fall is when many employers begin reviewing benefit budgets, evaluating plan design, and preparing for the year ahead. In 2026, employers have another item they may want to evaluate: Trump Accounts.
Trump Accounts are a new type of retirement account for eligible children. Contributions to these accounts became permissible beginning July 4, 2026, and employers may choose to establish a separate program to contribute to the Trump Account of an employee or an employee’s dependent.
For plan sponsors, one distinction is important from the start:
A Trump Account is not part of the company’s 401(k) plan.
An employer wishing to make qualifying contributions generally must establish a separate written Trump Account contribution program and follow applicable contribution, nondiscrimination, notification, verification, and reporting requirements. Treasury and the IRS issued proposed regulations covering these employer programs on August 11, 2026.Because these rules remain proposed, final regulations may differ from the framework described below.
What Is a Trump Account?
A Trump Account is a new type of individual retirement account available for a child who has not reached age 18 before the end of the calendar year in which the election is made and who has a valid Social Security number.
A parent, guardian, or other authorized individual can make the election by submitting Form 4547, Trump Account Election(s).
Certain children may also qualify for a one-time $1,000 federal pilot program contribution. Generally, the child must be a U.S. citizen, have a valid Social Security number, and have been born between January 1, 2025 and December 31, 2028. The required election must also be made. The federal pilot contribution does not count toward the general annual contribution limit
During the account’s growth period, most contributions from employers and other private sources are subject to an aggregate $5,000 annual contribution limit for 2026 and 2027, with inflation adjustments scheduled after 2027. Certain contributions, including the federal pilot contribution, qualified general contributions, and qualified rollovers, are excluded from that $5,000 limit.
Where Employers Come In
Employers are not required to make Trump Account contributions.
An employer may voluntarily create a Trump Account contribution program and make qualifying contributions for an employee or the employee’s dependent
For 2026, up to $2,500 per employee per calendar year may be excluded from the employee’s federal gross income when contributed in accordance with a qualifying Section 128 Trump Account contribution program. The $2,500 limit is scheduled to be adjusted for inflation after 2027.
Importantly, the $2,500 limit applies per employee, not per child.
For example, if an employee has more than one dependent with a Trump Account, a qualifying employer program may permit the employee to allocate the employer contribution among those accounts, but the aggregate Section 128 contribution attributable to that employee remains subject to the applicable employee-level limit.
Employer Section 128 contributions also generally count toward the recipient Trump Account’s $5,000 annual contribution limit.
How Would an Employer Set Up a Program?
Current proposed Treasury and IRS regulations provide a framework employers can use when considering implementation
Determine the Contribution Structure
The first step is deciding whether an employer contribution fits within the company’s broader compensation and benefits strategy.
An employer could, for example, establish a fixed contribution amount below the applicable annual limit. The written program would need to specify which employees are eligible, how contributions are determined, and how employees designate the Trump Accounts that will receive contributions.
Employers should evaluate the cost and administrative requirements of any contribution formula before implementation.
Adopt a Separate Written Program
Under the current proposed regulations, a Trump Account contribution program must be maintained under a separate written plan.
The written program generally must address:
- Classes of employees eligible to participate;
- The employer contribution rules;
- Procedures for designating recipient Trump Accounts;
- Required certifications, notices, and reporting;
- The plan year; and
- Procedures for addressing administrative errors
Because these requirements are separate from the employer’s 401(k), employers should coordinate implementation with the appropriate payroll, benefits, tax, and legal professionals
Confirm the Recipient Has a Valid Trump Account
An employer should not assume that an employee’s child automatically has a Trump Account.
The appropriate parent, guardian, or other authorized individual generally must first make the account election. The employee can then provide the information necessary for the employer’s contribution program
Under the proposed employer rules, an employer may rely on specified written employee certifications regarding matters such as the beneficiary’s relationship to the employee and date of birth. However, an employer may not rely solely on an employee’s statement that the account is a valid Trump Account. The employer must use a method reasonably designed to verify the account through information provided by a trustee, payroll processor, or other service provider
Coordinate With Payroll and Account Providers
Administrative coordination will be an important part of implementation.
The employer must appropriately identify qualifying payments as Section 128 contributions when transmitting them to a Trump Account trustee.
The proposed regulations also provide that an employer program may not require employees to use a particular Trump Account trustee or group of trustees as a condition of receiving the contribution.
Employers should confirm in advance how payroll, account verification, contribution transmission, and correction procedures will work.
Consider Whether to Offer a Salary-Reduction Option
The proposed regulations also permit a Trump Account contribution program to allow employees to fund Section 128 contributions through salary reduction under a Section 125 cafeteria plan, but only when the contribution is made to a dependent’s Trump Account.
This salary-reduction option cannot be used for contributions to an employee’s own Trump Account.
If offered, the Section 125 plan must specifically describe the Trump Account benefit and permit employees to prospectively change or revoke their elections at least monthly.
The tax treatment also requires some care. Qualifying Section 128 contributions may be excluded from the employee’s federal gross income and generally are not subject to federal income tax withholding. However, the proposed regulations state that these contributions generally remain wages for FICA and FUTA purposes unless another exclusion applies. Employers considering this feature should coordinate the payroll and tax treatment with their service providers and tax professionals
Review the Nondiscrimination Requirements
A Trump Account contribution program is subject to nondiscrimination requirements intended to prevent the program from disproportionately favoring highly compensated employees.
The proposed regulations address eligibility and contribution testing and include an average-benefits standard applicable in certain circumstances.
Accordingly, contribution amounts and eligibility classifications should be reviewed before implementation rather than assuming that any employer contribution structure will qualify for favorable tax treatment.
Communicate and Report the Benefit
Eligible employees must receive reasonable notification of the availability and terms of the employer’s Trump Account contribution program.
Employers must also provide employees with an annual statement showing qualifying contributions made on their behalf. Under current 2026 Form W-2 instructions, Section 128 Trump Account employer contributions are reported in Box 12 using Code TA.
How Is the Money Invested?
Trump Accounts have specific investment restrictions during the beneficiary’s growth period.
Generally, eligible investments are mutual funds or exchange-traded funds that track qualifying indexes of equities in primarily U.S. companies. The rules also restrict the use of leverage and generally limit annual fund fees and expenses to no more than 0.10% of the fund’s net asset value.
These restrictions do not eliminate investment risk. Account values will fluctuate with the underlying investments, and participants may experience investment losses. Contributions and tax advantages do not guarantee any particular future account value or financial outcome.
When Can the Money Be Accessed?
Trump Accounts are designed with restrictions on distributions during the beneficiary’s growth period.
Current IRS guidance generally limits distributions during that period to specified circumstances, including certain rollovers, distributions of excess contributions, certain ABLE account rollovers, and distributions following the beneficiary’s death.
The special Trump Account growth-period rules generally end after December 31 of the calendar year in which the beneficiary reaches age 17. Traditional IRA rules generally apply beginning in the calendar year the beneficiary turns 18.
Employers communicating the benefit should avoid presenting Trump Accounts as unrestricted savings accounts or as substitutes for emergency or short-term savings.
A Fall Checklist for Employers
For employers considering a Trump Account contribution program, this fall may be an appropriate time to evaluate:
- Whether the benefit is consistent with the company’s overall benefits strategy and budget;
- Which employees would be eligible;
- The employer contribution amount and formula;
- Whether a Section 125 salary-reduction feature should be considered;
- Applicable nondiscrimination requirements;
- How valid Trump Accounts will be verified;
- How payroll will transmit and report contributions;
- How employees will receive required notices; and
- Which internal and external parties will be responsible for ongoing administration
The appropriate structure will depend on the employer’s workforce, objectives, budget, payroll capabilities, and tax and legal considerations.
An Important Regulatory Consideratio
Employers should also recognize that the regulatory framework continues to develop.
As of September 15, 2026, Treasury and IRS regulations specifically addressing employer Trump Account contribution programs remain proposed regulations. The proposed regulations state that their formal applicability generally begins with plan years beginning on or after final regulations are published, while also providing that taxpayers may rely on the proposed rules for earlier plan years, subject to the conditions described in the guidance.
Employers implementing a program should therefore continue to monitor IRS and Treasury guidance and coordinate with their tax, legal, payroll, and benefits professionals as the rules develop.
Looking Ahead
Trump Accounts create a new option for employers evaluating benefits that extend beyond the traditional retirement plan.
Whether an employer contribution program is appropriate will depend on the organization and its workforce. Employers should consider the potential employee benefit alongside the program’s cost, administrative requirements, nondiscrimination rules, payroll-tax treatment, investment restrictions, and evolving regulatory guidance.
For plan sponsors, the starting point is not necessarily whether to adopt the program, but whether it merits consideration as part of the organization’s broader benefits strategy.
Together, let’s evaluate the way we approach retirement programs.
Sources
- Internal Revenue Service, Trump Accounts
- Internal Revenue Service, Instructions for Form 4547, Trump Account Election(s)
- U.S. Department of the Treasury and Internal Revenue Service, Proposed Regulations — Employer Contributions to Trump Accounts and Nondiscrimination Rules for Dependent Care Assistance Programs, August 2026
- U.S. Department of the Treasury and Internal Revenue Service, proposed regulations regarding Trump Account investments, August 2026
- Internal Revenue Service, 2026 General Instructions for Forms W-2 and W-3
- Internal Revenue Service, Publication 15, Employer’s Tax Guide (2026)
This material is for general informational and educational purposes only and is not intended to provide investment, legal, accounting, or tax advice. Trump Account rules and related regulatory guidance may change. Certain regulatory provisions discussed in this article are based on proposed Treasury and IRS regulations that may be modified before becoming final. Employers should consult the appropriate legal, tax, payroll, and benefits professionals regarding their specific circumstances. Investing involves risk, including the possible loss of principal.
