As Trump Accounts officially kick off, the U.S. Department of Labor (DOL) issued awaited guidance for employers regarding Employee Retirement Income Security Act (ERISA) status: Employer contributions made to a Trump Account will not generally be subject to Title I of ERISA.
The DOL’s recent technical release, which provides specific guidance on treatment of Trump Accounts, was issued shortly before the accounts launch July 4.
“This guidance should provide the clarity that employers need as the Administration rolls out Trump Accounts to jumpstart a golden age of investing in future generations,” said Acting Secretary of Labor Keith Sonderling. President Trump recently nominated Sonderling to serve as secretary of labor.
Trump Accounts, also known as Section 530A accounts, were created as part of President Donald Trump’s One Big Beautiful Bill and are intended to encourage early wealth building. They provide a $1,000 pilot contribution from the U.S. Treasury into a tax-advantaged account for eligible children born in the U.S. between 2025 and 2028. Once an account is established, parents, guardians, grandparents, and others can contribute up to $5,000 per year in after-tax dollars until the year before the beneficiary turns 18. The annual contribution limit adjusts for inflation after 2027.
According to IRS guidance, an employer may contribute to a Trump Account of an employee or the employee’s dependent up to $2,500 per year — which counts against the $5,000 annual limit — under an employer’s Trump Account contribution program.
Because Trump Accounts are a type of traditional individual retirement account, there were questions as to whether those arrangements would fall under ERISA. Some employers were concerned about that as a potential compliance concern.
But the guidance clarifies that employer contributions to Trump Accounts generally will not be considered employee pension benefit plans under ERISA, provided that employers maintain a limited role and meet specific conditions.
The DOL said that accounts established for employees’ dependents generally do not meet ERISA’s definition of an employee pension plan because the retirement benefit belongs to the child, rather than the worker.
A New Benefit Trend
The Trump administration’s new tax-advantaged investment accounts for children are poised to become the next employee benefit trend to watch.
A growing number of organizations — a list that now includes Bank of America, Charles Schwab, Sofi, JPMorgan Chase, and Visa — said they will contribute to employees’ accounts as a new perk.
“It’s a little early to start labeling these accounts as the ‘next big thing’ in employee benefits,” Bennett Hadley, financial security solution leader at HR and benefits consulting firm Segal in New York City, told SHRM in March. “But if they’re properly supported and utilized, then they could be a compelling solution for easing the financial burden of higher education for young adults and their parents.”
Employers are leaning on Trump Account contributions as a way to help improve the financial picture for their employees — and their employees’ dependents.
Charles Schwab CEO Rick Wurster said in a statement that by matching the government’s contribution for Schwab employees’ children, the firm is helping “more families take an early, confident step toward building long-term financial security.”
And JPMorganChase CEO Jamie Dimon said in a statement that Trump Account contributions are the financial services firm’s latest commitment to financial well-being efforts for its employees.
Employers’ willingness to pledge matching contributions is a “clear recognition that people’s lack of savings is an issue, and it’s an issue that they’re willing to put money toward solving,” Hadley said.
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