Trump account employer contributions under proposed rules

On Aug. 11, 2026, the IRS and Treasury Department published proposed regulations addressing employer contributions to Trump accounts, including nondiscrimination requirements for employer contribution programs. Tax professionals will want to review the proposal to discuss the following issues with business clients when considering contributions to Trump accounts for their employees.

How do employer contributions to Trump accounts work?

Trump accounts were added to the Internal Revenue Code by P.L. 119-21, commonly known as the One Big Beautiful Bill Act. A Trump account is a type of traditional individual retirement account (IRA) established for the exclusive benefit of an eligible individual and, after the individual’s death, the individual’s beneficiaries. The account must be clearly designated as a Trump account when established.

Special rules apply during the account’s “growth period,” which ends Dec. 31 of the calendar year in which the beneficiary turns 17. These rules address contributions, investments, distributions and reporting. After the growth period, most of the special rules no longer apply and traditional IRA rules under §408(a) generally govern the account.

Section 128 allows an employer to contribute to a Trump account belonging to an employee or an employee’s dependent through a qualifying Trump account contribution program. Contributions made under the program can be excluded from the employee’s gross income when applicable requirements are met.

The maximum exclusion is $2,500 per employee for 2026 and 2027. The amount is adjusted for inflation for taxable years beginning after 2027.

It’s important to note, however, that the limit applies to the employee rather than to each dependent separately. If an employee has multiple dependents with Trump accounts, an employer program may permit the contribution to be divided among those accounts. The employer’s aggregate contributions for that employee cannot exceed the annual limit.

Employers need a separate written program

The proposed regulations provide that a Trump account contribution program must be a separate written plan established by the employer for the exclusive benefit of its employees.

The program may provide contributions to Trump accounts for employees, their dependents or both. Employers would also need to follow nondiscrimination requirements intended to prevent the program from disproportionately benefiting highly compensated employees.

Under the proposed rules, an employer would apply the same contribution formula to each participating employee. However, an employer could provide different contribution amounts based on an employee’s number of dependents with Trump accounts if the program otherwise satisfies the applicable requirements.

Cafeteria-plan limitation

An employee may use a §125 cafeteria-plan salary reduction only for a contribution to a dependent’s Trump account, not the employee’s own Trump account. The proposed rules would require the election to be prospective and would require the cafeteria plan to permit participants to change or revoke the election at least monthly before salary becomes currently available.

The IRS views a salary reduction contribution to the employee’s own account as impermissible deferred compensation under §125.

Self-employed individuals are excluded

For §128 purposes, the proposed regulations use a common-law definition of employee. Partners, sole proprietors, directors serving solely as directors and 2% S corporation shareholders generally may not participate as employees in a §128 program, although their businesses may sponsor a program for common-law employees. This differs from §129, which expressly includes self-employed individuals in its definition of employee.

Employers would also have an employee reporting obligation under the proposed regulations.

A written statement showing the amount of §128 contributions made for an employee during the previous calendar year must be furnished to the employee. The proposed rules provide that this requirement can be satisfied by reporting Trump account contributions on Form W-2, Wage and Tax Statement, in Box 12 using code TA, according to the applicable form instructions.

Tax pros should be prepared to recognize these amounts when reviewing Forms W-2 and help employer clients understand the related reporting requirements. Employers considering a Trump account contribution program may also need to coordinate benefit administration, payroll and tax reporting to help ensure contributions are properly tracked and reported.

What should tax pros discuss with clients?

For employer clients interested in Trump account contributions, tax pros can explain that the income exclusion is only one part of the equation. Clients should also understand the written-plan requirement, contribution limits, eligibility rules, nondiscrimination provisions and reporting obligations.

Most importantly, tax pros should make clear that the regulations are not final. The Treasury and the IRS are accepting comments through Sept. 25, 2026, and a public hearing is scheduled for Oct. 15, 2026. Final regulations could differ from the proposal, so clients may need to revisit implementation decisions as additional guidance becomes available.

Stay ahead of developing guidance

Through timely education and practical resources, NATP gives tax pros the information they need to stay current.