Employer contributions to Trump Accounts
Under IRC §128, an employer can put up to $2,500 per employee per year into Trump Accounts — excluded from the employee's federal income tax. Proposed
The IRS proposed the detailed rules on August 11, 2026, held a public hearing on October 15, 2026, and has not yet issued final rules. Employers may rely on the proposed rules now rather than waiting. Proposed
The $2,500 limit, precisely
- ✓Per employee, not per child. An employee with three children does not get three $2,500 exclusions — all employer contributions for that employee's dependents share one $2,500 annual cap. Proposed
- ✓Across all employers. If you work two jobs, the $2,500 cap adds up across every employer — it is not $2,500 per job. Proposed
- ✓Inside the $5,000 cap. Employer contributions count toward the child's $5,000 annual combined limit. If the employer puts in the full $2,500, the family and everyone else share the remaining $2,500. Statute Proposed
- ✓2026–2027; inflation-adjusted after 2027. Proposed
- ✓Allocation is yours. The employee decides how the $2,500 is split across their children's accounts. Example: $1,250 into child A's account + $1,250 into child B's account. Proposed
- ✓Pilot match safe harbor. Employer contributions that match the government's $1,000 pilot payment can be disregarded in nondiscrimination testing, if offered on the same terms to all non-excluded employees. Proposed
Sources: IRS proposed regulations REG-101355-26; Thompson Hine analysis (Oct 2026). Last verified Oct 16, 2026.
Who can and can't participate
- ✓Can: common-law employees; contributions go to the Trump Accounts of the employee's dependents (children under 18 with a valid account). Proposed
- ✗Can't — your own account: salary-reduction contributions cannot go to the employee's own Trump Account; employer direct contributions are for dependents' accounts. Proposed
- ✗Can't — self-employed/partners/>2% S-corp shareholders: cannot get the §128 exclusion as "employers" for themselves. Proposed
- ✗Unclaimed accounts: contributions can only go to a claimed, activated account — not to an unclaimed Treasury auto account. The parent/guardian must complete the claim first. See claim your child's account. Proposed
- ✓Employee chooses the trustee: an employer cannot restrict employees to a single trustee. Proposed
Tax treatment
| Federal income tax | Payroll taxes (FICA / FUTA) | |
|---|---|---|
| Qualifying §128 employer contribution (≤$2,500) | Excluded from employee's gross income Proposed | Still wages — FICA and FUTA generally still apply Proposed |
| Salary-reduction via §125 cafeteria plan (dependent's account only) | Pre-tax Proposed | Follows cafeteria-plan payroll rules; confirm with payroll vendor Proposed |
| Employer side | Likely deductible as an ordinary and necessary business expense under §162 — confirm with a tax advisor Reported | |
Payroll systems need to code these contributions separately — income-tax-free but payroll-taxable is the combination most setups get wrong. Proposed
What the employer has to do — the TACP checklist
To keep the tax exclusion, contributions must be made under a formal Trump Account Contribution Program (TACP) — a separate written plan. The proposed rules require: Proposed
- Written plan document — who is covered, the contribution formula, whether salary reduction is included, how accounts are designated, notice and correction procedures.
- Employee notices — tell eligible employees the program exists and how it works.
- Account verification — verify each receiving account is a valid Trump Account (a method reasonably designed to do so; employee self-certification alone is not enough for account validity, though it may be relied on for the beneficiary's age and dependent status).
- Annual statements — show each employee the amount contributed for them in the prior calendar year (reported on Form W-2).
- Trustee reporting — report contributions to the account trustee, and notify the trustee whether contributions do or do not qualify under §128.
- Nondiscrimination testing — modeled on the §129 dependent-care rules: eligibility test, contributions-and-benefits test, and the 55% average benefits test, plus a safe harbor when contributions are offered on the same terms to all non-excludable employees. Unlike §129, there is no owner concentration test for §128. Failures can generally be corrected by including excess amounts in highly-compensated employees' income by the Form W-2 deadline — non-HCEs' tax treatment is not affected.
Salary-reduction special rules (§125)
- ✓Employees can fund a dependent's Trump Account with pre-tax dollars through the employer's cafeteria plan — not their own account. Proposed
- ✓Employees can change or revoke the election at least monthly, going forward only. Proposed
- ?Per IRS Office of Associate Chief Counsel remarks on Oct 5, 2026, businesses are expected to be able to offer salary-contribution channels by the end of 2026. Reported
Employers that have committed
Over 50 companies have committed to Trump Account contributions, according to the Treasury Department (Aug 2026). Reported names include BlackRock and Visa. Treat company lists as reported — confirm with the employer's HR/benefits team. Reported
Status
Proposed rules (Aug 11, 2026) → public hearing held Oct 15, 2026 (telephone) → final rules pending. Employers may rely on the proposed rules for plan years beginning before final rules are published. We will update this page when final rules issue. Proposed
Last verified Oct 16, 2026.
Common questions
No. Employer contributions can only go to a claimed, activated account — not to an unclaimed Treasury auto account. Complete the claim first. Proposed
No. The $2,500 annual exclusion is per employee across all employers combined. Track contributions across jobs and mid-year job changes — excess amounts can create tax issues for you. Proposed
Direct employer contributions don't come out of your pay at all. But they are still subject to Social Security/Medicare and unemployment payroll taxes even though they're excluded from federal income tax — so the tax saving is smaller than "fully tax-free" sounds. Proposed
Talk to HR or benefits — point them to the proposed rules (REG-101355-26) and the fact that employers may rely on them now without waiting for final rules. The main setup work is the written plan, payroll coding, and nondiscrimination testing. Proposed