The Treasury Department and IRS issued proposed regulations today providing guidance on how employers can contribute to Trump Accounts for employees and their dependents, establishing a framework for tax-free employer contributions capped at $2,500 per employee annually.
The proposed rules, published in the Federal Register, detail the requirements for employers to establish Trump Account contribution programs while maintaining nondiscrimination standards similar to those governing dependent care assistance programs under existing tax law.
Trump Accounts, created by the One Big Beautiful Bill Act in July 2025, are a type of traditional individual retirement account for eligible minors with special rules that apply during the account beneficiary’s growth period—generally from account establishment through December 31 of the year the beneficiary turns 17. After the growth period ends, standard IRA rules apply, according to the IRS.
Under proposed regulations, employers must establish Trump Account contribution programs through a separate written plan specifying eligible employees, contribution amounts, procedures for employees to designate accounts, and certification and reporting requirements. Employers must follow their written plans, provide reasonable notice to eligible employees, and furnish annual statements showing contributions made on each employee’s behalf.
The $2,500 annual limit applies to each employee, regardless of how many employers the worker has or how many dependents have Trump Accounts. An employee with multiple children could allocate the $2,500 across their dependents’ accounts but could not exceed that aggregate amount per year, according to the regulations.
Employers can make contributions through salary reduction arrangements under Section 125 cafeteria plans, but only to dependents’ accounts, not employees’ own Trump Accounts. Cafeteria plans offering this benefit must allow employees to change elections at least monthly, the proposed rules state.
The regulations establish nondiscrimination requirements to prevent Trump Account programs from favoring highly compensated employees. Programs must provide contributions on the same terms to all eligible employees and must satisfy eligibility and average benefits tests. Failure to meet nondiscrimination requirements would cause the program to lose tax-favored status for highly compensated employees, though benefits would remain excludable for non-highly compensated employees.
A notable safe harbor addresses employer concerns about matching the government’s $1,000 pilot program contributions available to eligible children born in 2025 through 2028. The proposed rules allow employers to match these contributions without triggering certain nondiscrimination tests, provided the matching contributions are made available on the same terms to all non-excluded employees.
Employers must verify that contributions go to valid Trump Accounts and may rely on employee certifications regarding the beneficiary’s age and relationship to the employee. However, employers cannot restrict contributions to accounts held by particular trustees, as only one Trump Account may exist per beneficiary. The regulations require employers to identify contributions as Section 128 contributions when transmitting them to trustees and to provide corrective notices within 21 calendar days if a contribution previously identified as excludable is later determined not to qualify.
The proposed regulations also provide comprehensive guidance on existing nondiscrimination rules for dependent care assistance programs, clarifying how eligibility classifications and average benefits tests apply. Employers can remedy certain average benefits test failures by including excess benefits in highly compensated employees’ income by the Form W-2 reporting deadline.
Sources
- Federal Register — Proposed rule on employer contributions to Trump Accounts and nondiscrimination rules, published August 11, 2026
- IRS — Treasury and IRS issue proposed regulations for Trump Accounts contribution pilot program, March 6, 2026 announcement
- PLANSPONSOR — Reporting on proposed regulations and employer contribution framework requirements
- Department of Labor — Technical Release 2026-02 on Section 128 employer contributions to Trump Accounts
