Employer contributions to Section 530A Trump Accounts: Key points

Trump Accounts were created under the One Big Beautiful Bill Act of 2025 (Public Law 119-21) by adding Section 530A to the Internal Revenue Code (Code). With contributions to Trump Accounts slated to begin as early as July 4, 2026, this alert outlines key aspects of the Section 530A framework – and outstanding questions – for employers considering offering Trump Account contributions as an employee benefit. 

What is a Trump Account? 

A Trump Account is a "beginner" traditional individual retirement account (IRA) for minors. Although the account is owned by the minor, it must be established and managed by a parent, guardian, or other authorized adult until the minor reaches 18 years of age. To be eligible for a Trump Account, the minor must be a United States citizen under 18 years old with a valid Social Security number. Additional information about Trump Accounts, including how to establish an account for a minor child, can be found on the dedicated Internal Revenue Service (IRS) webpage.

How can an employer contribute to a Trump Account? 

An employer can only contribute to a Trump Account via a Trump Account Contribution Program (TACP). A TACP is a separate written plan of an employer, for the exclusive benefit of its employees, that provides contributions to the Trump Accounts of its employees or dependents of its employees (but only for those employees or dependents, respectively, who have not yet reached age 18).

An employer has two options to choose from when contributing to the Trump Account of an employee or employee’s dependent:

1. The employer may contribute up to $2,500 annually – indexed for inflation after 2027 – to the Trump Account of an employee or the employee’s dependent. Contributions up to this amount are excluded from the employee’s taxable earnings.
   
   
2. The employer may also allow an employee to make their own pre-tax contributions of up to $2,500 to their dependents’ Trump Accounts via a Code Section 125 cafeteria plan. Contributions via a Code Section 125 cafeteria plan may only be made for an employee’s dependent and cannot be made to the employee’s own Trump Account as doing so would create a deferred compensation arrangement. Contributions that an employee makes to their dependent’s Trump Account outside of a Code Section 125 plan are not excluded from the employee’s income.

How is the $2,500 employer contribution limit applied?

Contributions made directly by the employer via a TACP and those made by the employee via a Code Section 125 cafeteria plan are both counted toward the $2,500 maximum pre-tax contribution limit per employee per year. This $2,500 limit is applied per employee, regardless of how many dependents the employee has.

Questions remain as to how Trump Account contributions through TACPs and Code Section 125 cafeteria plans will operate to provide tax-favored benefits to employees. The United States Department of the Treasury and the IRS intend to promulgate further guidance on TACPs and Code Section 125 cafeteria plans, including how non-discrimination rules will apply (see additional outstanding questions below).

Must an employer contribute to an employee’s Trump Account? 

No. Making an employer contribution to a Trump Account on behalf of an employee or their dependent is completely voluntary.

What is the government $1,000 contribution, and can employers match that contribution?

As part of establishing Trump Accounts, the federal government has promised to provide a $1,000 “seed money” contribution to the Trump Account of each eligible minor that is born between 2025 and 2028. As part of the $2,500 annual contribution limit described above, an employer may choose to match the $1,000 government contribution only for employees with eligible dependents born during that window.

What are the TACP document and contribution notification requirements? 

An employer’s TACP must be described in a separate written plan document for the sole purpose of providing the benefit to eligible employees and employees' eligible dependents. The employer is required to communicate the availability and terms of the TACP to eligible participants. When making a contribution, the employer must notify the trustee of the Trump Account that the contribution is excludable from the employee’s gross income. Before January 31 each year, the employer must also provide each employee a written statement showing the amount paid by the employer in contributions to the Trump Account of the employee’s dependent in the prior year.

Are employers required to comply with non-discrimination rules when making Trump Account contributions? 

Yes. The Trump Account rules require employer programs to meet non-discrimination rules and other rules similar to those applicable to dependent care flexible spending accounts (DCFSAs) and dependent care assistance programs (DCAPs) under Code Section 129. Under these rules, an employer cannot discriminate in favor of highly compensated employees when administering the program. The details of exactly how these rules will apply to Trump Accounts may be addressed in future IRS guidance. As with other Code Section 129 programs, meeting the non-discrimination requirements could create challenges as participation is often greater among highly compensated employees.

What can a Trump Account be used for? 

During the “growth period” for a Trump Account – starting when the account is opened and ending December 31 of the year before the minor turns 18 – the account can generally be used for deposits up to $5,000 annually, indexed for inflation starting after 2027. Withdrawals during the growth period are allowed only for eligible rollovers, excess contribution distributions, and distributions upon the death of the account beneficiary. Once the minor turns 18, the Trump Account automatically converts into a traditional (i.e., pre-tax) IRA and generally becomes subject to all applicable traditional IRA withdrawal rules, with a few exceptions. This includes taxable distributions for higher-education expenses, for the first-time purchase of a home up to $10,000, or for retirement after reaching age 59½, all without penalty. Other non-exempt withdrawals are includable in income and subject to early withdrawal penalties.

What outstanding questions remain?

Additional guidance may help clarify the following issues for employers:

• Whether TACPs are Employee Retirement Income Security Act of 1974 (ERISA) plans. ERISA generally applies to programs established and maintained by an employer to provide retirement income to employees. Because Trump Accounts are treated as traditional IRAs once the child turns 18, it is unclear whether establishing a TACP would constitute an ERISA plan.
  
  
• Whether special Trump Account-related mid-year changes will be permitted under Code Section 125 plans or whether the standard restrictions applicable to other 125 elections will apply.
  
  
• How Trump Account contribution limits will be monitored and enforced. In addition to employer contributions through a TACP or Code Section 125 plan, family members, philanthropists, or charities may also contribute to a minor’s Trump Account. Open questions include how excess contributions would be addressed, what amounts (if any) would be refunded and to whom, how contributions from multiple unrelated employers would be treated, and whether employers could face penalties if contribution limits are exceeded.
  
  
• How non-discrimination testing failures would be addressed. It is unclear whether an employer could claw back discriminatory contributions, what would occur if an employee refused re-payment, and what penalties or other remedies might apply to the TACP.
  
• What level of detail will be required in a TACP plan document. Outstanding questions include whether specific provisions will be mandated and whether a model TACP will be issued.

For more information, please contact the author.