By Newburg | CPA Staff

The One Big Beautiful Bill Act (P.L. 119‑21) introduced “Trump Accounts,” a new tax‑advantaged program to help families save for children under age 18. With initial guidance issued in Notice 2025‑68 and additional regulations expected, employers should understand the key features and compliance requirements before contributions begin in mid‑2026.

WHAT ARE TRUMP ACCOUNTS?

Eligibility

  • Available for children under age 18 with a Social Security number.
  • Accounts are established by a parent, guardian, or authorized adult.
  • The IRS will provide a setup portal and Form 4547 by mid‑2026.

Contributions

  • No contributions permitted before July 4, 2026.
  • Up to $5,000 per beneficiary annually during the “growth period.”
  • Limit indexed for inflation beginning in 2027.

EMPLOYER CONTRIBUTION PROGRAMS

Contribution Limits

  • Employers may contribute up to $2,500 per employee per year.
  • Limit applies per employee—not per dependent.

Tax Treatment

Employer contributions are excluded from employee income.

Contributions do not create basis and are taxable to the beneficiary upon distribution.

Plan Requirements

  • Employers must maintain a written Trump Account contribution program.
  • Program must meet nondiscrimination rules similar to IRC Section 129(d).
  • Contributions must be designated as Section 128 employer contributions.

Cafeteria Plan Rules

  • Salary reduction contributions allowed only for an employee’s dependent.
  • Employees may not make salary reductions to their own Trump Accounts.

ADMINISTRATION & COMPLIANCE

Nondiscrimination Testing

  • Testing requirements resemble dependent care assistance rules.
  • Employers with limited eligible employees may face demographic challenges.

Reporting & Documentation

  • Employer contributions must be reported to the trustee and on Form W‑2 (Code TA).
  • A written plan must describe eligibility, administration, and reporting.

Trustee Requirements

  • Only banks or IRS‑approved nonbank trustees may serve.
  • Trustees must monitor contribution limits, investments, and compliance.

NEXT STEPS FOR EMPLOYERS

Employers should begin preparing now by:

  • Monitoring upcoming IRS guidance and system rollouts.
  • Updating or drafting written plan materials.
  • Coordinating with payroll and benefits administrators.
  • Evaluating nondiscrimination testing feasibility.

CONCLUSION

Trump Accounts offer a new opportunity for employers to support employees’ long‑term family savings. Given the program’s new launch and logistics, early preparation will help ensure smooth compliance once contributions begin in July 2026.

For more information, visit trumpaccounts.gov (once available) or contact your Newburg | CPA advisor.

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