IRS Fills in Some of the Blanks on Trump Accounts

In August, the Internal Revenue Service (IRS) and Department of the Treasury (Treasury) issued proposed regulations filling in important details about Trump Accounts, including how employer contribution programs would operate and what investments may be held in the accounts during a child’s growth period. 

Created by the One Big Beautiful Bill Act of 2025, a Trump Account is a type of traditional IRA established for an eligible child. Special rules apply until the end of the calendar year in which the child turns 17. 

Who is Eligible for a Trump Account? 

A Trump Account generally may be established for a child until the end of the calendar year in which the child turns 17, provided the child has a valid Social Security number. Individuals can enroll eligible children using IRS Form 4547. The “growth period” begins when the account is established and ends on December 31 of the calendar year in which the beneficiary turns 17. Beginning the following January, most of the special Trump-account restrictions cease to apply, and the ordinary rules governing traditional IRAs become effective.  

What Types of Contributions Are Allowed? 

Trump Accounts officially launched on July 4, 2026, after which time, contributions to the accounts could begin.[i] In 2026, contributions of up to $5,000 per child are allowed.[ii] In 2027 and beyond, the annual contribution limit will be indexed to inflation. Contributions are allowed until December 31 of the calendar year when the individual turns 17. There are various contributions that are allowed under the law: 

Employer Contributions 

Employers do not have to allow for these contributions, but should they wish to, the IRS released proposed guidance on August 11, 2026, for employers.[iii] Under the law, employer contributions are excluded from the gross income of the employee, and as noted above, is limited to up to $2,500 per year (subject to inflation after 2027). 

In order to set up a contribution program, the proposal suggests that an employer would set it up in a separate written plan, specifying: i) the classes of employees eligible to participate; ii) the rules governing employer contributions; iii) the procedures an employee must use to designate the Trump Account to receive contributions; iv) the certification, the notice, and reporting procedures required; v) the plan year; and vi) the procedures for correcting administrative failures. An employer would be required to follow the written plan. An employer would also need to provide certain notifications to employees. The proposed rule would also set forth requirements for notifying the trustee if a contribution is made in error.  

The program would also have to satisfy nondiscrimination requirements governing eligibility and benefits. The proposal includes a numerical safe harbor for testing whether the program makes benefits sufficiently available to non-highly compensated employees, as well as rules for correcting certain testing failures. 

The proposed regulation would allow employees to make contributions “via salary reduction under a section 125 cafeteria plan if the contribution is made to the Trump Account of the employee’s dependent but not if the contribution is made to the Trump Account of the employee,” as it would be prohibited “deferred compensation.”  

The $2,500 exclusion applies separately to each employee, regardless of how many employers the employee has or how many children receive contributions. If unrelated employers contribute more than $2,500 on behalf of the same employee, the excess generally must be included in that employee’s income. Spouses who are each employees may each qualify for a separate $2,500 exclusion.  

Comments on the proposed rule are due September 25, 2026, with a public hearing on October 15, 2026. 

Investments 

On August 20, 2026, the IRS and Treasury released a separate proposed regulation providing guidance on eligible investments.[iv] An eligible investment “must be either a mutual fund or an exchange traded fund (ETF)” and must “track the returns of a qualified index” such as the S&P 500 stock market index “or any other index and for which regulated futures contracts (as defined in section 1256(g)(1)) are traded on a qualified board or exchange (as defined in section 1256(g)(7)).” The investments must be comprised of equity investments in primarily U.S. companies and must also not use leverage (i.e., investment can’t borrow money to try to boost returns). Annual fees and expenses may not exceed 0.1 percent of the balance of the investment in the fund; by way of example, if a Trump Account has $10,000 invested, the fund’s annual fees could be no more than $10 per year.  

Comments on the proposal are due on October 20, 2026. 

The Bottom Line 

According to Treasury, more than 6.5 million families have signed up for a Trump Account as of July 15, 2026.[v] While the IRS and Treasury continue to sketch out the details, benefits professionals should be aware of the proposed regulations and how these accounts might fit into a future benefits lineup. Because the regulations are still only in the proposal stage, employers interested in offering a program should begin evaluating those operational requirements while monitoring the final rules. 

[i] U.S. Department of the Treasury, “U.S. Treasury Announces the Official Launch of Trump Accounts and Full Scope of the App,” press release, July 4, 2026, https://home.treasury.gov/news/press-releases/sb0554.

[ii] U.S. Department of the Treasury, “The American Dream Starts Now,” Trump Accounts, accessed August 27, 2026, https://trumpaccounts.gov/. 

[iii] Internal Revenue Service, “Employer Contributions to Trump Accounts and Nondiscrimination Rules for Dependent Care Assistance Programs,” Proposed Rule, Federal Register 91, no. 154 (August 11, 2026): 51611–51633, https://www.federalregister.gov/documents/2026/08/11/2026-16314/employer-contributions-to-trump-accounts-and-nondiscrimination-rules-for-dependent-care-assistance. 

[iv]Internal Revenue Service, “Employer Contributions to Trump Accounts and Nondiscrimination Rules for Dependent Care Assistance Programs,” Proposed Rule, Federal Register 91, no. 154 (August 11, 2026): 51611–51633, https://www.federalregister.gov/documents/2026/08/11/2026-16314/employer-contributions-to-trump-accounts-and-nondiscrimination-rules-for-dependent-care-assistance. 

[v] U.S. Department of the Treasury, “Treasury Announces Frank Bisignano to Lead Next Phase of Trump Accounts Expansion,” press release, July 15, 2026, https://home.treasury.gov/news/press-releases/sb0563.