IRS, Treasury Seek Comments on Employer Contributions to Trump Accounts
Proposed rules would allow up to $2,500 in tax-free employer contributions and touch open nondiscrimination standards, tax reporting and other issues.
The Department of the Treasury and the IRS proposed regulations spelling out how employers can contribute to Trump Accounts for workers and their dependents, providing companies with a framework for the new tax-favored employee benefit while imposing nondiscrimination and administrative requirements.
The proposed regulations, published Tuesday in the Federal Register, also address nondiscrimination rules for employer-sponsored dependent care assistance programs. The rules would affect employers maintaining either type of program and employees who participate in them.
Trump Accounts were created in 2025 by the One Big Beautiful Bill Act. They are a type of individual retirement account established for eligible children, with rules on special contributions, investments, distributions and reporting generally applying through the end of the year in which the beneficiary turns 17.
Under the law, employer contributions made through a qualifying Trump Account contribution program can be excluded from an employee’s gross income. The exclusion is capped at $2,500 per employee for 2026 and 2027 and is subject to inflation adjustments after 2027. The limit applies to the employee, rather than to each dependent, meaning a worker with multiple children could not receive a separate $2,500 exclusion for each child’s account.
The proposal could be particularly important for employers considering Trump Account contributions as a new workplace benefit. According to the IRS, a qualifying program would have to operate under a separate written plan specifying who is eligible, how much the employer will contribute, how employees designate accounts, and the procedures for required certifications, notices, reporting and corrections. Employers would also have to follow the terms of their written plans for contributions to qualify for the tax exclusion.
Employers would have to provide eligible workers with reasonable notice that the program is available and explain its terms. Companies would also have to give employees an annual statement showing contributions made on their behalf. That requirement could be met by reporting Trump Account contributions in Box 12 of Form W-2 using code “TA,” according to the proposal.
The proposal also establishes procedures intended to make sure contributions go to eligible accounts. Employers could rely on written employee certifications for certain information, including a beneficiary’s relationship to the employee and date of birth. But employers could not rely solely on those certifications to determine whether an account is a valid Trump Account; they would need a method reasonably designed to verify the account through information from a trustee, payroll processor or other service provider.
The rules would also prevent employers from requiring workers to use a particular Trump Account trustee. According to Treasury and the IRS, such restrictions could shut some employees out of employer contributions because only one Trump Account may exist per beneficiary.
Another provision addresses contributions through cafeteria plans. Employees could make pre-tax salary-reduction contributions to a dependent’s Trump Account, but not to their own account. Employers offering the benefit through a Section 125 cafeteria plan would be able to make election changes monthly.
The regulations would also establish nondiscrimination standards intended to prevent Trump Account programs from disproportionately benefiting highly compensated employees. Failure to meet those requirements generally would jeopardize the income exclusion for highly compensated employees, rather than those for workers who are not highly compensated.
Separately, the proposal provides guidance on existing nondiscrimination requirements for dependent care assistance programs. Those programs can provide employees with tax-free dependent care assistance—generally up to $7,500 annually, or $3,750 for married taxpayers filing separately—but must satisfy tests governing eligibility and benefits for highly compensated workers and certain owners.
The IRS is accepting electronic or written comments on the proposal through September 25. A public hearing is scheduled for October 15 at 10 a.m. ET, although the hearing will be canceled if the agency receives no timely requests to speak.