Trump Accounts Just Got More Complicated: IRS Reveals New Rules for Employers

The Trump Account was presented as a new way for American families to build long-term wealth for children. Now, employers considering the benefit face a more detailed set of rules. The Internal Revenue Service and the Treasury Department have proposed regulations setting out how businesses can contribute to Trump Accounts for employees or their dependants.

The proposals cover more than the amount employers can contribute. They also establish requirements for written plans, employee notices, account verification, payroll reporting, and nondiscrimination. For companies hoping to introduce the benefit quickly, the new rules could bring more administrative work than expected.

Employers Can Contribute Up to $2,500

Under the new law, employers can contribute up to $2,500 a year to a Trump Account belonging to an employee or the employee's dependant. The contribution can be excluded from the employee's taxable income when it is made through a qualifying Trump Account Contribution Program.

The $2,500 limit applies on an aggregate basis per employer rather than separately for every dependant. Trump Accounts also have an overall annual contribution limit of $5,000, subject to inflation adjustments after 2027. Employer contributions count towards that limit. The employer contribution provisions took effect on 4 July 2026, making the proposed regulations particularly relevant for businesses considering contributions this year.

A Written Plan Will Be Required

One of the most important requirements is the need for a formal written programme. An employer's Trump Account Contribution Program must be established through a separate written plan for the exclusive benefit of employees. The plan must explain key procedures covering eligibility, contributions, notices, reporting, and the correction of administrative errors.

Employers will also have to meet nondiscrimination requirements covering eligibility, contributions, and benefits.The rules are intended to ensure that the programme does not improperly favour certain groups of employees.

Employers Must Verify Accounts

Businesses will also need to confirm that contributions reach valid Trump Accounts. The proposed rules allow employers to rely on employee certifications for certain information, including the beneficiary's age and dependant status. But employee certification alone will not confirm that the account itself is valid.

Employers must use reasonable methods to verify the account through information supplied by a trustee, payroll processor or another service provider. Employers must also identify Section 128 contributions when transmitting them to the trustee. If a contribution is later found not to qualify, the employer would have to send a corrective notice to the trustee within 21 calendar days. That adds another compliance step for payroll and benefits teams.

Payroll Reporting Adds Another Requirement

Trump Account contributions will also affect payroll reporting. Employers can use Code TA in Box 12 of Form W-2 to report qualifying employer contributions. Companies offering Trump Account benefits through a Section 125 cafeteria plan face additional requirements.

The plan must specifically describe the Trump Account Contribution Program. Employees must also be allowed to prospectively change or revoke salary-reduction elections at least monthly before the salary becomes available.

Investment Rules Are Also Strict

The proposed regulations separately address where Trump Account money can be invested. During the account's growth period, funds generally must be invested in mutual funds or exchange-traded funds that track a qualified index made up primarily of US companies. The proposed rules exclude indexes that have, or are marketed as having, a focus on environmental, social or governance factors.

Investment fees also face a strict limit. Annual fees and expenses for an eligible investment cannot exceed 0.1% of the investment balance under the proposed rules. Trustees must establish a default eligible investment unless the beneficiary provides different instructions.

Employers Now Have a Deadline

The regulations remain proposals and are not yet final. Public comments are due by 25 September 2026. For employers, the immediate task is to understand how the proposed requirements could affect their benefit plans, payroll systems, and account verification processes.

Trump Accounts may offer businesses a new way to provide a family-focused benefit. But the proposed framework shows that making contributions will involve more than simply transferring money into a child's account. For companies planning to contribute during 2026, getting the administrative structure right could prove just as important as the contribution itself.