Legislative lowdown: IRS, Treasury release guidance for employer-sponsored Trump Accounts

The Internal Revenue Service (IRS) and the Treasury Department recently issued proposed guidance for employers seeking to make contributions to Trump Accounts on behalf of their employees’ dependents. The document detailed how companies could let their employees make pre-tax contributions to Trump Accounts, as well.

Trump Accounts, which officially launched in July, are a type of tax-advantaged savings account for children under 18. Employers are able to contribute up to $2,500 a year to Trump Accounts, but many have held off on doing so thus far, HR Brew reported shortly after they rolled out.

These recent proposed regulations from the Treasury could help more employers decide whether this is a benefit they want to provide to their employees.

How employers can set up a Trump Account benefit. If employers want to set up a Trump Account contribution program, they must do the following, according to an Aug. 11 press release from the Treasury:

• “Maintain a separate written plan document;
• Follow certification procedures that permit employers to rely on employees’ self-certification of the Trump Account beneficiary’s age and dependent status, but require validation that the account into which the contribution will be made is a Trump Account;
• Provide notices to employees;
• Provide annual statements to employees; and
• Provide reporting to the Trump Account trustee.”

The full text of the proposed guidance included additional details relevant to HR pros, including nondiscrimination rules that would apply to these programs. Such rules seek to ensure that benefits, including dependent care assistance programs, don’t disproportionately favor highly compensated employees.

Additionally, the guidance clarified that employers may set up “cafeteria plans” so that employees can make pre-tax deductions from their income to go toward Trump Accounts.

The guidance isn’t final; there will be a public hearing on the proposed regulations on October 15 in Washington, DC.

Will Trump Accounts catch on? “By minimizing compliance burdens for employers, the proposed regulations make widespread adoption of Trump account contribution programs, including programs that permit pre-tax contributions through a cafeteria plan, more likely,” the agencies wrote in the proposed guidance.

But it’s still unclear whether employer-sponsored Trump Account contributions will see “widespread adoption,” as the administration hopes. One sticking point could be the fact that other types of savings vehicles, such as 529 plans, may be more advantageous for families seeking to save for their children’s education, Bloomberg reported.

Will McBride, chief economist with the Tax Foundation, echoed a similar concern in an interview with HR Brew when Trump Accounts were first enacted in 2025. “It’s not, to me, obvious that this Trump account would be better than a 529,” he said.