Trump Accounts: What Employers Need to Know
Part of a series | The One Big Beautiful Bill Act Series
Trump Accounts provide employers with a potential new way to help their employees build long-term savings for their children and tax dependents.
On August 11, 2026, Treasury and the IRS issued proposed regulations (REG-101355-26) providing guidance to employers that choose to make contributions to Trump Accounts for employees or their tax dependents. The proposed regulations also clarify nondiscrimination requirements for employers offering Trump Account contribution programs and dependent care assistance programs.
What are Trump Accounts?
H.R. 1, “The One Big Beautiful Bill Act” (the Act), created Trump Accounts, a new type of savings account for eligible children. The Act also added Internal Revenue Code Section 128, which allows employers to make pre-tax contributions to Trump Accounts and permits employees to make pre-tax contributions to their tax dependents' Trump Accounts through an employer cafeteria plan.
Parents, guardians, and other authorized individuals may open a Trump Account on behalf of an eligible child under age 18. Contributions may come from a variety of sources, including family, friends, employers, government entities, and charitable organizations.
Under the law, contributions to Trump Accounts are limited to $5,000 per child annually (indexed for inflation). However, annual contributions from tax-exempt organizations, such as qualified charities, are unlimited.
Contributions may be made before a beneficiary turns 18. Beginning at age 18, the beneficiary may access funds for certain qualified expenses, such as education costs or first-home purchase. Other withdrawals are generally subject to traditional IRA distribution rules. Investments are generally limited to low-cost, broadly diversified U.S. equity index funds and ETFs.
Accounts may be funded through a newborn pilot program pursuant to which the federal government will contribute $1,000 per child into every eligible account opened for children born between Jan. 1, 2025 and Dec. 31, 2028, and who are U.S. citizens with a valid Social Security Number.
Employer and Employee Contributions
The proposed regulations outline requirements for employers that elect to maintain a Trump Account contribution program. Employees may also make pre-tax contributions, through a cafeteria plan, to a tax dependent's Trump Account (but not to their own account). Self-employed individuals are not eligible to make pre-tax contributions to Trump Accounts.
Under the proposed regulations, employers and employees may make combined contributions of up to $2,500 annually per employee (indexed for inflation). The $2,500 counts toward the child’s overall $5,000 annual contribution limit and is exempt from federal income tax (but remains subject to FICA and FUTA taxes).
To offer Trump Account contribution programs, employers generally must:
Maintain a separate written plan document.
Follow prescribed employee certification procedures.
Provide required employee notices and annual statements.
Report contributions on Form W-2 (Box 12, Code TA).
Communicate required contribution information to the Trump Account trustee and verify that contributions are made to a valid Trump Account.
Nondiscrimination Requirements
Trump Account contribution programs must satisfy nondiscrimination requirements designed to ensure benefits are not provided disproportionately to highly compensated employees. The proposed regulations include rules addressing eligibility, benefit availability, testing methodologies, and correction procedures for certain failures.
The proposed regulations also include a special nondiscrimination safe harbor for employers that match the federal government's $1,000 Trump Account pilot contributions for eligible children. Section 128 contributions tied to qualifying pilot program contributions may be disregarded for purposes of certain nondiscrimination tests, provided the matching contributions are made available on the same terms and conditions to all eligible employees. Treasury and the IRS indicated this approach is intended to encourage and facilitate employer adoption of pilot program matching arrangements.
Preparing for Implementation
While the proposed regulations do not address all administrative requirements, employers now have sufficient direction to evaluate whether Trump Account contribution programs could complement their existing financial wellness and family-oriented benefit offerings.
Potential considerations include:
Employee interest in education and long-term savings benefits.
Eligibility standards for employer-funded contributions.
Payroll and HR system readiness.
Communication strategies for employees with eligible children.
Coordination with existing benefit and compensation programs.
Establishment of a separate written Trump Account contribution program document and related employee certification, notice, and reporting procedures.
Looking Ahead
Trump Accounts provide employers with a potential new way to help their employees build long-term savings for their children and tax dependents. While final regulations have not yet been issued, the proposed regulations offer employers important information for evaluating and implementing Trump Account contribution programs.
ADP will continue monitoring Treasury and IRS developments and will provide updates as additional guidance is released.
ADP Compliance Resources
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Updated August 13, 2026
