Employer Contributions To Trump Accounts

Trump accounts are a type of traditional individual retirement account established by a parent or guardian for the benefit of a child with a Social Security number. Trump accounts may be funded from several sources, including individual employees, private donors and the federal government. Beginning July 4, 2026, employers may also contribute to Trump accounts of employees or their dependents by establishing Trump account contribution programs (TACPs). The Internal Revenue Service (IRS) recently published Notice 2025-68, instructing employers on how to contribute to Trump accounts pursuant to TACPs.

Employees, not employers, establish Trump accounts

Though employers may contribute to Trump accounts, employers cannot establish them. To open a Trump account, a parent or guardian must elect to establish a Trump account with the IRS by filing IRS Form 4547 or via trumpaccounts.gov.

Employers may contribute to employee Trump accounts via TACPs

If an employer elects to contribute to Trump accounts, the employer must establish and sponsor a TACP. A TACP is a written plan established for the exclusive benefit of employees that provides for employer contributions to Trump accounts of employees or their dependents.

Employers may contribute up to $2,500 per year in pre-tax benefits to each employee via a TACP. This limit applies per employee, not per child. For example, if an employee has three children, and the employer contributes $2,500 to one child's Trump account in a single year, the employer may not contribute additional amounts to the other two children's Trump accounts in that year.

Employers may structure contributions to Trump accounts in two ways:

1. Employers may directly contribute up to $2,500 each year (indexed for inflation after 2027). These direct contributions may be for employees or their dependents. The employer will need to notify the trustee of the Trump account that the contribution is excludable from the employee's gross income.
2. Employers may also offer employees the opportunity to elect to reduce their pay to make up to $2,500 in pretax contributions to their dependent child's Trump account via a Section 125 cafeteria plan. Employees may only make pretax contributions to the accounts of their dependent children. Employees may not contribute to their own Trump account. Both employer contributions and employee pre-tax contributions count toward the $2,500 limit.

The relationship between TACPs and Section 125 cafeteria plans to allow for employee pre-tax contributions remains unclear. The Treasury Department and IRS intend to promulgate further guidance on the coordination between TACPs and Section 125 cafeteria plans.

TACPs must satisfy certain conditions to maintain eligibility

Internal Revenue Code (Code) Section 128 and Notice 2025-68 provide certain conditions that TACPs must satisfy for employers to provide Trump account contributions.

1. The TACP must have a written plan document. No guidance yet clarifies what terms must be included in the plan document.
2. The TACP must meet requirements "similar to" certain requirements for dependent care assistance programs. The Treasury Department and IRS are likely to issue future guidance clarifying these requirements.
3. As previously noted, when contributing to a Trump account, an employer must affirmatively indicate to the Trump account trustee that the contribution is an employer Trump account contribution excludible from the employee's gross income.

We expect guidance in 2026 identifying additional reporting and administrative requirements for employers sponsoring TACPs.

Employer contributions to Trump accounts are treated differently from contributions to 529 plans

Both Trump accounts and qualified tuition programs under Code Section 529 (529 Plans) are savings vehicles for dependent children. Employers considering whether to contribute to either vehicle should consider:

• Employees may exclude employer contributions to Trump accounts from their gross income. By contrast, employer contributions to 529 Plans are not excludable for employees.
• Employers may qualify for state tax credits or deductions for contributing to employees' 529 Plans. Similar tax breaks for Trump accounts are possible but have not yet been announced.
• Earnings on Trump accounts grow tax-deferred but are taxed as ordinary income when distributed. Earnings on contributions to 529 Plans grow tax-deferred and are not taxed upon distribution, provided they are used for qualified educational expenses.
• 529 Plans offer a broader range of investment choices than Trump accounts. Trump accounts may only be invested in a restricted list of mutual and exchange traded funds.

Final Thoughts

To contribute to employees' Trump accounts starting as soon as July 4, 2026, an employer must establish a TACP in the coming months. However, early TACP adoption poses the risk that the final Trump account regulations, expected in 2026, will impose new obligations on TACP design and administration.

Additionally, it remains unclear whether TACPs are "employee welfare benefit plans" under the Employee Retirement Income Security Act of 1974 (ERISA). ERISA compliance, required if TACPs are employee welfare benefits plans, would add reporting and administrative burdens on top of the existing TACP-specific requirements. The U.S. Departments of Labor and Treasury expect to issue guidance on how employers may ensure TACPs are not subject to ERISA.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.