Trump Accounts launched on July 4, 2026. These special individual retirement accounts (IRAs) can help children under 18 build savings. The trumpaccounts.gov website provides illustrative estimates showing significant growth potential. Those estimates assume an authorized filer opens an account at birth with a $1,000 opening deposit. They use historical S&P 500 averages to estimate earnings.

For example, the illustrations show that if an initial Trump Account receives only a $1,000 opening contribution, the child who benefits from the Trump Account (the ‟account beneficiary”) would have an expected balance of $6,000 at age 18. If the account beneficiary takes no distributions before age 55, the balance could grow to an estimated $243,000. A Trump Account that receives the $5,000 maximum contribution each year until the account beneficiary turns 18 could reach an estimated $13 million at age 55 if no distributions have been taken. Amid public concern about the viability of the Social Security system, this wealth-building potential may make Trump Accounts attractive.

Trump Accounts may receive contributions from nonprofits, governments, employers, and individuals. In general, contributions to a Trump Account are subject to an annual limit of $5,000, adjusted for inflation.

Governments and nonprofits may make contributions only through the Treasury Department, and such contributions must be made in equal amounts to the Trump Accounts of every account beneficiary in a qualified class. Contributions from governments and nonprofits through the Treasury Department do not count toward the $5,000 annual contribution limit.  As of July 6, 2026, at least 88 companies, foundations, and states have announced their intent to provide funding of Trump Accounts.

Employers may adopt a Code Section 128 Plan to help employees fund Trump Accounts for eligible dependents. Employers may also assist employees who are under age 18, but only on a limited basis. Code Section 128 permits employers to contribute to employees’ eligible dependents’ Trump Accounts tax-free if the arrangement satisfies plan design and administrative requirements. This article outlines the statutory and regulatory framework for Trump Accounts and explains how employers can use Code Section 128 to offer this benefit.

Important caveat: Guidance remains incomplete. Treasury and the IRS have not yet issued proposed regulations under Section 128. Employers should monitor regulatory developments before finalizing implementation.

Trump Account Basics: What Employers Need to Know

What Is a Trump Account?

A Trump Account is a type of traditional individual retirement account subject to special rules under Code Section 530A. Only one funded Trump Account may exist for a child at any time. An authorized filer creates the child’s initial Trump Account by filing Form 4547 with the U.S. Treasury through trumpaccounts.gov or a related app. After establishment, the initial Trump Account may be rolled over to a Trump Account at a different financial institution through a ‟qualified rollover contribution.” Employers have no role in creating initial Trump Accounts.

Qualified Rollover Contributions

A ‟qualified rollover contribution” means a direct trustee-to-trustee transfer of the entire balance of a child’s Trump Account to a new rollover Trump Account for the same child. Employees use this method to transfer a Trump Account from the initial trustee to a trustee that works with the employer’s payroll provider or other vendors involved in the operation of the Section 128 Employer Plan.

The Growth Period

Most special Trump Account rules apply only during the ‟growth period,” which ends on December 31 of the year before the child turns 18.

Example: A child born on October 1, 2025, turns 18 on October 1, 2043. That child’s growth period ends on December 31, 2042.

After the growth period ends, the account generally becomes a regular traditional IRA.

Who Can Have a Trump Account?

For purposes of an Employer Section 128 Plan, an ‟Eligible Individual” is a person for whom an authorized Form 4547 filer has established an initial Trump Account through the U.S. Treasury and who will not turn 18 before the end of the calendar year.

This means most individuals under age 18 may have a Trump Account even if they do not qualify for the $1,000 pilot program contribution that has drawn the most public attention.

Permitted Investments During the Growth Period

During the growth period, a Trump Account may hold only ‟eligible investments.” These investments must provide low-cost, broad-market equity exposure for minor beneficiaries. An eligible investment must meet all of the following requirements:

• It is a mutual fund or exchange-traded fund (ETF) that tracks an index of U.S. companies (such as the S&P 500).
• It does not use leverage.
• Its annual fees and expenses do not exceed 0.1% of the fund balance.
• It meets any other criteria that the IRS or Treasury establishes in future guidance (none required as of this writing).

Other Key Rules During the Growth Period

The following rules also apply while the account beneficiary remains a minor:

• Separate contribution limit. Trump Accounts have their own annual contribution limit, separate from other IRA limits ($5,000, subject to an annual cost-of-living adjustment (COLA) after 2027).
• No distributions. Generally, the account beneficiary cannot withdraw money from a Trump Account during the growth period.
• No individual tax deduction. Code Section 219 does not allow a deduction for individual contributions to a Trump Account.
• Trustee reporting. Trump Account trustees have distinct reporting obligations that resemble, but differ from those for other IRAs.

Code Section 128 Employer Plans

Why Employers Should Consider Adopting a Section 128 Plan

Employees cannot deduct their own direct contributions to a dependent’s Trump Account. In contrast, employees and employers can contribute to the same Trump Account through a Section 128 Plan without triggering income tax for the employee. The ability to fund Trump Accounts on a pre-tax basis is likely to become an attractive employee benefit.

Like dependent care reimbursement plans under Code Section 129, an employer may directly fund a Trump Account or allow employee salary deferral contributions through a cafeteria plan under Code Section 125. However, employees who will not be 18 by the end of the calendar year may not fund their own Trump Account through Section 125 salary deferrals. The June 17, 2026, U.S. Department of Labor Technical Release 2026-02 (the ‟DOL Release”) provides guidance on how individuals under age 18 may contribute to their own Trump Account through a payroll deduction taxable contribution program. The DOL Release also states that Section 128 Plans are generally not subject to ERISA.

Which Accounts Can Receive Employer Contributions?

An employer may contribute to:

• A Trump Account belonging to an employee who is an Eligible Individual (i.e., the employee is under 18 and meets the other requirements); and
• A Trump Account belonging to any eligible dependent of an employee.

Contribution Limit: $2,500 per Employee

Employers may contribute up to $2,500 per employee, not per dependent child. This limit is subject to a COLA beginning after 2027. The $2,500 limit also applies to salary deferral contributions to a Trump Account.

Key design consideration: Because the cap applies per employee rather than per child, employers should decide how to allocate contributions when an employee has more than one eligible dependent. Plan documents should state whether the employer will provide a uniform dollar amount, match salary deferrals, allow employee direction among eligible accounts, or apply administrative cutoffs tied to payroll periods or plan years.

Section 128 Plan Design Requirements

A Section 128 employer arrangement must satisfy written plan and nondiscrimination requirements modeled on Code Section 129 dependent care assistance rules. Key requirements include:

• Written plan. The employer must maintain a written arrangement that does not discriminate in favor of highly compensated employees. The plan document should specify eligibility rules, contribution amounts or formulas, timing, available accounts, any salary deferral feature, claims or substantiation procedures, and amendment or termination rights.
• Cafeteria plan coordination. If the employer offers salary deferral contributions, the Section 128 Plan should coordinate with the employer’s Section 125 cafeteria plan. Key coordination points include election timing, irrevocability rules, payroll reductions, and the rule limiting salary deferrals to dependents’ accounts.
• Proper income exclusion treatment. Employers should treat contributions as excludable from the employee’s income only if they make the contributions under the Section 128 arrangement and identify them to the Trump Account trustee as Section 128 contributions.
• Eligibility and employee notice. The arrangement must satisfy eligibility and notice requirements similar to those for dependent care assistance programs. Employers should provide appropriate notice to eligible employees.
• Benefits testing. The average benefits for non-highly compensated employees must equal at least 55% of the average benefits for highly compensated employees.
• Annual statement to employees. The employer must furnish each participating employee a written statement, by January 31 of the following year, showing the contributions the employer made to the employee’s (or the employee’s dependent’s) Trump Account during the preceding calendar year.
• No statutory principal-owner limitation. Unlike dependent care assistance programs under Section 129, Section 128 does not cross-reference the Section 129(d)(4) rule limiting the share of benefits that may be provided to principal owners. Absent future IRS or Treasury guidance imposing a similar limit, a Section 128 Plan is not automatically subject to the 25% principal-owner cap that applies to Section 129 dependent care programs. Employers should still monitor future guidance on this point.

Our Employee Benefits attorneys can assist if your organization is considering adopting a Section 128 Plan.