Trump Accounts: What Employers Need to Know

Written By Strongpoint Partners

The One, Big, Beautiful Bill Act (OBBBA), created Trump Accounts, a new tax-advantaged savings vehicle for children under age 18, under section 530A of the Internal Revenue Code. It also added section 128 to the Code, which allows an exclusion from gross income for employer contributions to the Trump account of an employee or of any dependent of an employee pursuant to a Trump Account Contribution Program. The provisions apply to taxable years beginning after December 31, 2025.

In August 2026, the Department of the Treasury and the Internal Revenue Service issued proposed regulations providing guidance to employers that choose to make contributions to Trump Accounts for employees or their dependents. The IRS is planning a hearing in mid-October 2026 on the proposed regulations, so changes can still be made to the requirements. While the IRS is still finalizing the requirements, we would like to provide you the currently available information on Trump Accounts.

Quick Summary

Employer limit$2,500 per employee, per year (not per child)
Child's annual limit$5,000 per child, per year. Employer contributions count toward it.
One time government contributionU.S. citizen children born January 1, 2025 through December 31, 2028 may receive a one-time $1,000 federal contribution. It is not counted towards the $5,000 limit.
Federal income taxQualifying contributions are excluded from the employee's income and are not subject to federal income tax withholding.
Payroll taxesContributions remain wages for Social Security, Medicare, and FUTA
Form W2 reportingEmployer contributions are reported on Form W2 Box 12 code TA
Status of the rulesProposed regulations issued August 11, 2026. Public hearing scheduled for October 15, 2026.

What Is a Trump Account?

A Trump Account is a new type of retirement account established for eligible children under age 18 similar to individual retirement account (IRA). Contributions may be made during the child's growth period and investments generally must be held in qualifying low-cost U.S. equity index funds or ETFs until the child reaches age 18. After age 18, the account generally converts to a traditional IRA and becomes subject to traditional IRA rules.

Key features:

  • Available for children under age 18 who are US citizens and have an SSN.

  • Annual contribution limit generally is $5,000 per child, indexed for inflation after 2027.

  • Eligible U.S. citizen children born between January 1, 2025 and December 31, 2028 may receive a one-time federal $1,000 contribution through the pilot program. This contribution does not count towards the $5,000 annual limit.

    Contributions can come from:

  • Parents or family members

  • Employers

  • Governmental entities

  • Qualified rollover contributions

  • Certain charitable organizations

  • Only one Trump Account for an individual.

  • Funds cannot be withdrawn before age 18, except in limited circumstances.

Trump Account Election

Parents, guardians, and other authorized individuals can use IRS Individual Online Account to complete Form 4547 Trump Account Elections to open a Trump Account for a child with a Social Security number if the election is made before the calendar year in which the child turns age 18. 

Important: Automatic Enrollment and Accounts Waiting to be Claimed

On October 1, 2026 the US Treasury announced that over 60 million more eligible children under the age of eighteen were auto enrolled in Trump account and these accounts are ready to be claimed.

A parent or guardian must claim the child’s automatically enrolled Trump Account to manage it and allow for family members, friends, and employers to contribute. Eligible children must also have their Trump Account claimed to receive the one-time $1,000 contribution from Treasury.

To claim a child’s Trump Account, a parent or guardian can download the official Trump Accounts app, available for iOS and Android or complete and file Form 4547.

U.S. Treasury Press Release: https://home.treasury.gov/news/press-releases/sb0642/

Employer Involvement Options

1. Employer Contribution Opportunity (Section 128)

Section 128 of the code governs the employer contributions. Employers may establish a Trump Account Contribution Program (TACP) and contribute to Trump Accounts for employees (only if minors) or employees' dependents under age 18. Employer contributions can provide meaningful savings benefits while offering a tax-efficient compensation alternative.

Employer Contribution Limits

Employers may contribute up to $2,500 per year per employee (not per child) under a qualified program. This limit is aggregated across all Trump Account contributions made on behalf of the employee and counts toward the overall annual Trump Account contribution limit of $5,000. Employees with multiple children need to notify the employer how they would like to allocate the employer contribution between the multiple children accounts with the aggregated employer contribution per employee not to exceed $2,500.

Qualified employer contributions:

  • Are excluded from federal income tax but remain subject to Social Security, Medicare, and FUTA taxes.

  • Are generally deductible by the employer as a business expense.

 Administrative Requirements

To establish a Trump Account employer contribution program, the employer must:

  • Maintain a separate written plan document;

  • Follow certification procedures that permit employers to rely on employees’ self-certification of the Trump Account beneficiary’s age and dependent status, but require validation that the account into which the contribution will be made is a Trump Account;

  • Provide notices to employees;

  • Provide annual statements to employees; and

  • Provide reporting to the Trump Account trustee.

  • Satisfy nondiscrimination requirements that prevent programs from disproportionately benefiting highly compensated employees.

  • Report the employer Trump Account contribution on the employee W2 in box 12 with code TA.

Guidance is still being rolled out, so please continue to monitor the DOL and US Treasury announcements.

2. Employee Contributions Through Cafeteria Plans (Section 125)

Employers may also allow employees to contribute through salary reduction under a section 125 cafeteria plan. Note: the combined employer contributions under section 128 (above) and employee contributions under section 125 cannot exceed $2,500 per employee (not per child). These contributions:

  • May be made only to the Trump Account of the employee's tax dependent, not to the employee's own account.

  • Count toward the same employer contributions annual per-employee limit of $2,500.

  • Taxation of employee contributions under section 125 is still to be clarified by IRS.

  • Require the cafeteria plan document to describe the benefit and to let employees change or revoke their elections prospectively at least monthly.

How to Make a Contribution

The responsible party with access to the Trump account can share a contribution link with the employer:

  1. In your child’s account, select the QR code icon at top left (next to your child’s name)

  2. Select Share link

  3. Select who you want to share the link with via text or email

  4. The contributor will receive a message with the QR code that links them to on-screen instructions to make a contribution.

The following methods are NOT supported currently but most likely will be released in the future:

Wire transfers, direct deposit, request for payment (RFP), asset or account transfers (ACATS), Depository Trust Company (DTC) transfers, or 529 rollovers are not supported.

Employer Action Items

Companies interested in implementing a Trump Account contribution program should:

  • Evaluate workforce interest and demographics.

  • Review payroll and benefits administration capabilities.

  • Coordinate with tax, legal, and benefits advisors.

  • Develop required written plan documentation.

  • Monitor final IRS regulations and implementation guidance.

  • Assess communication and enrollment strategies for employees.

Resources:

Thinking about offering contributions to your team? Let’s walk through what it would mean for your payroll. Contact us at payroll@strongpay.com.

Strongpoint Partners
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