Guidance on Trump Accounts continues to emerge, clarifying some issues while leaving others unresolved. As background, the One, Big, Beautiful Bill Act (OBBBA), signed into law in July of 2025, created a new type of youth IRA called a "Trump Account" for children not yet age 18 on the last day of the calendar year. Newly created Internal Revenue Code (IRC) section 530A subjects these youth IRAs to a host of special rules during their growth period, after which the account essentially is treated as a traditional IRA beginning January 1 of the year in which the child turns 18.
Importantly for employers, the same law also added IRC §128, which permits up to $2,500 per employee (not per dependent) per year in tax favored Trump Account contributions, which can be funded by the employer and/or by the employee via §125 salary reduction. Because each Trump Account has a $5,000 annual contribution limit during the growth period, no more than $2,500 of that $5,000 can be from §128 and related contributions (both the $2,500 and $5,000 figures will index).
Although IRS Notice 2025-68 (issued December 2, 2025), proposed regulations published March 9, 2026, Technical Release 2026-02 released June 17, 2026, and the draft 2026 Form W-2 provide some additional clarity, many aspects of the §128 employer-contribution rules remain unaddressed. Trump Account contributions may begin as early as July 4, 2026, but most employers are likely to wait for further guidance before implementing their program.
Applies to:
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Any employer that wants to offer a §128 Trump Account Contribution Program (TACP) to employees starting July 4, 2026 or later.
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Employers considering a §125 cafeteria plan amendment to allow employees to make pre-tax contributions toward Trump accounts for their dependent children under the employer’s TACP.
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