IRS proposes employer-contribution rules for Trump Accounts

The Trump Account has a rulebook now. PLANADVISER reports that the Treasury Department and the IRS published proposed regulations Tuesday in the Federal Register explaining how employers can contribute to the child retirement accounts created in 2025 by the One Big Beautiful Bill Act.

A qualifying contribution program must operate under its own written plan. The plan document has to specify who is eligible, what the employer contributes, how employees designate accounts, and what certifications, notices, reporting, and corrections the program requires. Contributions get the tax exclusion only if the employer follows the written plan.

Trump Accounts are IRAs for eligible children, with special contribution, investment, distribution, and reporting rules that run through the end of the year the beneficiary turns 17. The employer-side benefit is simple: contributions made through a qualifying program are excluded from the employee's gross income. The exclusion tops out at $2,500 per employee for 2026 and 2027, and after that it adjusts with inflation.

The cap follows the employee, not the dependent. PLANADVISER says a worker with several children cannot take $2,500 for each child's account. For a family that hoped to cover multiple children in one year, the design question is which account receives the money.

The administrative layer is concrete. Employers must give eligible workers reasonable notice that the program exists, explain its terms, and provide an annual statement of contributions made on the worker's behalf. The proposal gives employers a ready vehicle for that statement: Box 12 of Form W-2, with code 'TA'.

The IRS is policing where the money lands. Employers may rely on written employee certifications for information like a beneficiary's relationship and date of birth. Certifications alone do not confirm that an account is a valid Trump Account, so the proposed regulations require a method reasonably designed to verify account validity.

The same rulemaking touches nondiscrimination rules for employer-sponsored dependent care assistance programs. PLANADVISER notes these rules would affect employers that maintain either type of program and the employees who participate.

Treasury has built a rulebook that asks a small tax break to carry plan-level discipline. The exclusion is real, but it comes with a written plan, annual notices, W-2 reporting, and a verification step. The IRS is handing employers a benefit with the paperwork attached.

For a small employer, the checklist will look heavier than the tax break. A signed plan document, a W-2 line, and an account verification procedure are real overhead for a break capped at $2,500 per employee. That trade-off is likely to dominate the comment period.

The proposal is open for comment, per PLANADVISER. The immediate work for plan sponsors and advisers is to see where payroll systems and the new requirements diverge: draft the plan document, set designation procedures, and get code 'TA' into Box 12 before final rules land. The comment period is where employers can argue how much of that paperwork is worth a $2,500 exclusion.