Employers Get Guidance on Trump Account Contributions

Employers now have more guidance regarding contributions to the newly enacted Trump Accounts.

The Treasury Department and the IRS released proposed guidance Aug. 11 on how employers can contribute to Trump Accounts, tax-advantaged investment accounts for children which launched July 4.

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. 

The proposed guidance reiterated that employers may make a tax-free contribution of up to $2,500 per year to the Trump Account of an employee or their dependents. The contribution would count toward the $5,000 annual contribution cap. 

The guidance gives “employees the option to contribute pre-tax dollars directly to those accounts,” Treasury Secretary Scott Bessent said in a statement.

The proposed regulations outline requirements for employers that wish to maintain a Trump Account contribution program. According to the new guidance, employers 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.

The proposed regulations also clarify how the nondiscrimination requirements apply to Trump Account contribution programs and dependent care assistance programs. In general, eligibility to participate in these programs and contributions and benefits under these programs must not discriminate in favor of highly compensated employees or their dependents.  

The Treasury and the IRS are seeking comments on the proposal until Sept. 25. A public hearing on the proposed regulations has been scheduled for Oct. 15.

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Employers Are Making Contributions

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. Roughly 50 companies have committed to making contributions, the Treasury said. 

“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.”