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Starting next year, employers will have the option to contribute to a new type of savings account on behalf of employees or their employees’ dependents.
Dubbed “Trump accounts,” these savings vehicles will be structured like an individual retirement account. Every US baby born between Jan. 1, 2025 and 2028 will receive one with $1,000 in seed funding from the federal government thanks to a pilot program run by the Treasury Department.
Some employers—like Dell Technologies, Uber, and Goldman Sachs—have already said they’ll take advantage of this new benefit, which is part of the recently enacted Republican budget bill. But HR teams must consider whether contributing to these accounts makes sense for their workforce, especially if they already offer other types of financial support for workers and their children, benefits experts say.
How “Trump accounts” will work. The accounts are expected to become available in July 2026. While only babies born from 2025 to 2028 will be eligible to receive government-seeded accounts, any child under the age of 18 can have an account opened on their behalf.
Parents and other family members can contribute up to $5,000 a year to the accounts each year, while employers can put up to $2,500, tax-free, toward them. Contribution limits will be indexed to inflation from 2027 onward.
Once enrollees turn 18, the Trump accounts will take the form of an individual retirement account, according to Craig Copeland, director of wealth benefits research with the Employee Benefits Research Institute. This means that beneficiaries will only be able to make penalty-free withdrawals before they turn 59-and-a-half for a limited set of reasons, including paying for higher education or buying a home, Copeland noted.
“That’s the big caution with those accounts,” Copeland said. “If you’re putting in money and you don’t think people are going to use it or they end up using it for something else, then it becomes this potential tax disadvantage.”
Should your company contribute? Employers already have a number of different types of fringe benefits they can offer their employees to help them build savings, such as flexible savings accounts, health savings accounts, and 529 plans.
A 529 plan, which is intended to help enrollees save for college, would seem to compete directly with these Trump accounts, said Will McBride, chief economist with the Tax Foundation, a think tank that tends to favor lower taxes. “It’s not, to me, obvious that this Trump account would be better than a 529,” he said.
He noted that the Trump accounts have one major drawback: Under the current law, individuals cannot withdraw from them until they turn 18. That’s not the case with 529 accounts, which don’t include age limits or age requirements. The budget bill actually includes a provision to expand the types of education that 529 savings can be used for—like homeschooling or K-12 education—which would seem to suggest it’s more flexible than a Trump account, McBride added.
Regardless of whether your company decides to contribute to a Trump account, the policy raises an interesting question for employers about how they should support “long-term wealth creation” for their workers’ kids, said Timothy Flacke, co-founder and CEO of Commonwealth, a nonprofit focused on building financial security.
While 529 plan contributions aren’t as common as other types of employer-provided savings benefits—such as health savings or retirement accounts—some companies, like Amazon, are starting to support their workers this way. A recent Commonwealth survey found the vast majority of parents (96%) who didn’t have a 529 plan would be interested in getting one if their employer offered it.
“We have seen consistently over the last couple of decades in our work that parents are often more motivated to save for their kids than even for themselves,” Flacke said. “And so it stands to reason that an employer that does something that recognizes their child, or their new child, probably has a really outsized impact for workers.”