The One Big Beautiful Bill Act (OBBBA) introduced a new savings vehicle for children, commonly referred to as Trump Accounts. These accounts are designed to provide families with a long-term, tax-advantaged way to invest for a child’s future, using a structure that shares similarities with traditional IRAs but without an earned-income requirement during childhood.
The core rules governing Trump Accounts, including eligibility, contribution limits, and investment restrictions, are outlined in detail in Trump Accounts Explained: Rules, Benefits, and How to Get Started. However, until recently, there was limited clarity around employer contributions to Trump Accounts, including how those contributions could be structured, reported, and coordinated with existing benefit plans. New guidance now helps answer many of these questions.
Establishing a Trump Account Contribution Program (TACP)
Employers that wish to support this benefit may establish a Trump Account Contribution Program (TACP). Participation is entirely optional, and not all employers will choose to offer such a program. A TACP must be set up as a separate written employer plan, independent of other employer-sponsored benefit plans.
The program must be maintained for the exclusive benefit of employees and must provide for contributions either to an employee’s own Trump Account, if the employee is under age 18, or to the Trump Accounts of the employee’s qualified dependents who have not yet reached age 18. This structure allows employers to offer a family-oriented benefit without integrating the program into retirement plans, health benefits, or dependent care assistance plans.
Employer and employee contribution options
Employers may make direct contributions to Trump Accounts on behalf of employees or their eligible dependents. Contributions of up to $2,500 per employee per year are excluded from the employee’s taxable income, making employer-funded Trump Accounts a potentially tax-efficient benefit.
Although Trump Accounts are not governed by ERISA, employers are cautioned against designing programs that disproportionately benefit owners, key employees, or other highly compensated individuals. Program eligibility and contribution formulas should be structured to avoid favoring select groups within the workforce.
As an alternative, employers that do not wish to contribute directly may allow employees to fund Trump Accounts through a Section 125 cafeteria plan. Under this approach, employees may make pre-tax salary-reduction contributions, up to $2,500 per year, to the Trump Accounts of their dependent children. Contributions made through the cafeteria plan receive favorable tax treatment, while contributions made outside of the plan do not.
It is important to note that the $2,500 limit applies per employee, not per child. Employees may also make additional after-tax contributions of up to $5,000 per year per dependent, subject to coordination with employer contributions and overall Trump Account contribution rules.
Documentation and reporting requirements
A Trump Account Contribution Program must be documented through a standalone written plan. Employers are also required to clearly communicate the availability and terms of the program to all eligible employees. In addition, employees must receive an annual written statement showing the amount contributed on their behalf each year.
When contributions are made through a cafeteria plan, the amounts will be reported on the employee’s Form W2, using Box 12 with code “TA.” These amounts are reported for informational purposes only and are not included in taxable wages.
Account-level reporting is handled by the plan trustee, not the employer. Each year, the trustee will issue Form 5498TA, which tracks contributions, rollovers, fair market value, and basis for the Trump Account.
Nondiscrimination considerations
Employer contributions made through a TACP are subject to nondiscrimination standards similar to those found in Internal Revenue Code §129(d), which governs dependent care assistance programs. In practice, this means that a TACP may not discriminate in favor of highly compensated employees with respect to eligibility, contributions, or benefits.
Testing focuses on whether rankandfile employees have meaningful access to the program and whether contribution patterns or plan design disproportionately favor higher-paid participants. While administrative complexity remains modest, employers should work with benefits and tax advisors to ensure compliance.
Looking ahead
Although Trump Accounts are still in the early phases of implementation, employer-sponsored Trump Account Contribution Programs have the potential to evolve into a new category of family-focused employee benefits. For employers seeking additional ways to support employees with young families, these programs may complement traditional retirement plans and dependent care benefits.
At the same time, several open questions remain, particularly around administrative processes, operational timing, and coordination with existing benefit structures. As additional guidance is released, employers will be better positioned to evaluate whether contributing to Trump Accounts aligns with their overall benefits strategy and workforce goals.
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