Trump Accounts: What the New Employer Rules Actually Say

The One Big Beautiful Bill Act created Trump Accounts under new Code Section 530A, a savings vehicle for children, and Section 128, which lets an employer contribute to one on a tax-advantaged basis.

What the statute didn't explain was how an employer actually sets such a program up. On August 11, 2026, Treasury and the IRS issued proposed regulations answering that. Comments are due September 25, 2026, and a public hearing is scheduled for October 15, 2026.

Importantly, employers may rely on the proposed regulations before final rules are published. If you want to offer this, you don't have to wait.

The headline

An employer may contribute up to $2,500 per year to the Trump Account of an employee or an employee's dependent. The contribution is deductible to the business and excluded from the employee's gross income. The amount is indexed for inflation after 2027.

The catch most business owners will care about

The proposed regulations define "employee" using the common-law standard and exclude self-employed individuals. That exclusion covers partners, sole proprietors, and more-than-2% S corporation shareholders — even those who pay themselves W-2 wages.

If you own your business, you generally cannot use this to fund your own children's accounts with pre-tax dollars.

Your business can still offer the benefit to non-owner employees, and the contributions are deductible. But the owner is on the outside of the program. For a family business where the owner and spouse are the only people on payroll, there's no benefit here at all.

For an employer with a genuine non-owner workforce, there is a planning point worth knowing: each spouse is treated as a separate employee, so two working spouses may each receive a $2,500 contribution and direct the combined $5,000 to the same child's account. The regulations confirm this applies even when both spouses work for the same employer.

Describing it as "$2,500 tax-free" is incomplete

Qualifying Section 128 contributions are excluded from federal gross income and generally aren't subject to federal income tax withholding.

They are not excluded from wages for FICA or FUTA purposes.

Social Security, Medicare, and federal unemployment tax still apply. That's a real cost on both the employer and employee side, and any communication to employees that describes the benefit as simply tax-free will be inaccurate and will generate questions when paychecks don't match expectations.

What a compliant program requires

The proposed regulations set out an operating framework, and it's more involved than writing a check.

A Section 128 program must be a separate written plan for the exclusive benefit of employees. Not a paragraph in a handbook — a standalone plan document.

The employer must verify the account using a reasonable method, confirming contributions go to a valid Trump Account. The employer must identify each contribution to the account custodian in writing as a Section 128 contribution, and send a corrective notice if an amount turns out not to qualify.

Nondiscrimination testing applies, along lines similar to dependent care assistance programs. Programs with limited eligibility classes face eligibility classification testing, a contributions-and-benefits test, and an average benefits test. Employers matching the government's $1,000 pilot contribution for children born 2025 through 2028 get a safe harbor for some but not all of these tests.

Employees can also fund a dependent's account pre-tax through a cafeteria plan salary reduction, but not their own account. That requires a plan amendment and monthly election machinery.

The practical obstacle

The regulations require account validation that assumes data connections among employers, payroll providers, and account trustees that do not yet exist at scale. Treasury acknowledged in the preamble that it's still exploring a secure electronic validation method.

Launch timing will depend as much on whether your payroll provider is ready as on whether your plan document is drafted. The IRS's own analysis expects adoption to concentrate among large employers first, with small employers working through third-party administrators.

Our read

If you're a small employer with non-owner staff and you're looking for a differentiating benefit, this is worth watching — but not worth rushing. The rules are proposed, the payroll infrastructure isn't built, and the FICA treatment makes it less generous than the headline suggests.

If you're an owner hoping to fund your own children's accounts through the business, the proposed regulations close that door.

The sensible step now is a conversation with your payroll provider about their timeline. When they're ready, the plan document and testing are manageable.

This article describes proposed regulations that may change before they are finalized. It is general information, not tax or benefits advice for your specific situation. Please talk with us before acting on anything here.