Tax-advantaged individual retirement accounts (IRAs) for eligible children under age 18—known as Trump accounts—were created to encourage saving at a young age. On August 11, 2026, the U.S. Department of Treasury (Treasury) and the Internal Revenue Service (IRS) issued proposed rules offering long-awaited guidance on employer contributions to Trump accounts. The rules include guidance on employer contributions, applicable nondiscrimination rules and related clarification for dependent care assistance programs (DCAPs).

This blog focuses on Trump account contribution program design, payroll deductions, written plan requirements, employer contribution limits and implementation considerations. A separate blog will address nondiscrimination testing for Trump account contribution programs and DCAPs.

To learn more about Trump accounts, view our previous blogs “Proposed Rules on Trump Accounts Are Here” and “Trump Accounts Move Ahead, but Employer Contribution Questions Remain.”

Who do the proposed rules affect?

The proposed rules affect employers that maintain, or are considering, a Trump account contribution program, as well as employees who participate in those programs.

Who is considered an employee?

Under the proposed rules:

• An employee is an individual who qualifies as an employee under common-law standards.
• Partners, sole proprietors, directors serving solely as directors, and 2% S corporation shareholders are not considered employees eligible for these tax-favored employer contributions.
• Self-employed individuals may sponsor Trump account contribution programs for their employees, but they are not considered employees and cannot participate in the programs themselves.

Can a dependent’s Trump account be funded through payroll reduction contributions?

Yes. As discussed in the Journal of Accountancy, the proposed rules allow employees to use pre-tax payroll deductions under a Section 125 cafeteria plan to contribute to a dependent’s Trump account. Employees may not use the same pre-tax arrangement to fund their own Trump accounts because IRS cafeteria plan rules treat that as impermissible deferred compensation.

Employers offering this feature must allow employees to change or revoke their contribution elections at least monthly.

What else must employers know?

A qualifying program must operate under a separate written plan that specifies:

• Classes of employees eligible to participate
• Employer contribution amount
• Whether contributions can be made via payroll deduction under a Section 125 cafeteria plan
• Procedures for how employees will designate which dependent’s Trump account will receive contributions
• Required certification, notice and reporting procedures
• Plan year
• How the plan will correct errors and notify employees and trustees if contributions are later found to be taxable.

What employee certifications may employers rely on?

Employers may rely on written employee certifications to confirm certain eligibility-related information about the beneficiary, such as the beneficiary’s relationship to the employee and date of birth. However, those certifications do not confirm that the account itself is a valid Trump account. Employers must use a reasonable method to verify the account, such as information from a trustee, payroll processor or other service provider.

What information must employers communicate to trustees?

When making a contribution to a trustee, an employer must specify that the amount is a Section 128 contribution to a Trump account and verify that the contribution is being made to a valid account. Section 128 was added to the Internal Revenue Code (IRC) by the law commonly known as the One, Big, Beautiful Bill Act (OBBBA), which excludes employer contributions from gross income for an employee or any dependent of an employee for a Trump account contribution program.

Can employers require use of a specific trustee?

No. The proposed rules prohibit employers from requiring employees to use a specific Trump account trustee. Treasury and IRS explain that allowing employers to choose the trustee could prevent employees from receiving employer contributions if their dependents already have Trump accounts with another trustee.

What employee notices and contribution statements are required?

Employers must provide eligible employees with the following reasonable notifications:

• Availability and terms of the program
• Written statement showing the amount of contributions made for an employee during the previous calendar year under the employer’s Trump account contribution program. The proposed rule states, “This requirement may be satisfied by including the amount of Trump account contributions on the employee’s Form W–2, Wage and Tax Statement, in the manner specified in the form’s instructions for reporting Section 128 contributions.”

What is the maximum tax-free employer contribution?

For the 2026 and 2027 tax years, employers may contribute up to $2,500 per employee on a tax-free basis. The limit is adjusted for inflation beginning with the 2028 taxable year. For married couples, each spouse’s employer may contribute up to the $2,500 maximum.

Contributions exceeding the maximum exclusion amount are taxable compensation and are subject to Federal Insurance Contributions Act (FICA), Railroad Retirement Tax Act (RRTA) and Federal Unemployment Tax Act (FUTA) withholding.

How does the contribution limit apply if an employee has multiple children?

An employee with multiple children who have Trump accounts may divide employer contributions among those accounts, as long as the total contribution does not exceed the annual $2,500 limit.

How does the limit apply if an employee has multiple jobs?

If an employee has multiple jobs and receives contributions from more than one employer, the total amount excluded from gross income is limited to the $2,500 annual limit.

What steps should employers take before implementation?

Before implementing a program, employers may want to:

• Gauge employee interest in Trump accounts
• Communicate eligibility requirements for employer-funded contributions
• Coordinate with benefits, payroll and HR systems before implementation
• Create a separate written contribution program document that includes employee certification, notice, reporting and compliance procedures
• Understand cafeteria plan limits, including that payroll deductions under a Section 125 cafeteria plan are permitted only for contributions to a dependent’s Trump account.

What questions remain for employers?

Despite the proposed rules, several unanswered operational and adoption questions remain. A recent PLANADVISER article highlighted questions raised by industry experts.

Melissa Elbert of Aon focused on practical implementation issues for employers, including “how money will actually move, how they will verify that an account is a legitimate Trump account, and whether payroll and benefits systems will need to be modified.”

Greg Long of Alight Solutions raised questions about whether Treasury will create a centralized verification-and-remittance mechanism. Such a process could allow employers to send account information and contributions through a single channel and help ease a major administrative concern.

SIFMA Foundation President Melanie Mortimer pointed to several adoption questions, including whether easier account setup and transfers would encourage participation and whether automatic enrollment could be added as a next step, even if that change would require congressional action.

Beyond the questions raised in the PLANADVISER story, employers are still looking for answers to questions such as:

• Will employers be notified when an account nears its annual contribution limit?
• Do employers need to coordinate with the Trump account $5,000 per-child annual limit in any way?

What comes next?

Employers that want to comment on the proposed rules must submit comments by September 25, 2026. A public hearing is scheduled for October 15, 2026 at 10 a.m. ET. Requests to speak, along with outlines of the topics to be discussed, must be received by 5 p.m. ET on October 13, 2026.

Developed by International Foundation Information Center staff. This does not constitute legal advice. Please consult your plan professionals for legal advice.