Proposed rules map employer contributions to Trump Accounts

The Treasury Department and the IRS published proposed regulations in the Federal Register Tuesday showing how employers can put money into Trump Accounts for workers and their dependents. For advisors, this is the first concrete map of a qualifying contribution program — and of the places where it can go wrong.

Trump Accounts came into being last year through the One Big Beautiful Bill Act. They are IRAs for eligible children, with special rules on contributions, investments, distributions, and reporting that generally apply through the year the beneficiary turns 17. Employer contributions made through a qualifying program can be excluded from gross income, capped at $2,500 per employee for 2026 and 2027, with inflation adjustments after that. The cap is per employee, not per child, so a worker with three children cannot claim three exclusions.

The proposal answers a question advisors have been wrestling with since the law passed: the statute created the tax break but left the mechanics to regulation. Now the shape of a compliant program is visible. A qualifying program must operate under a separate written plan that spells out who is eligible, how much the employer will contribute, how employees designate accounts, and the procedures for certifications, notices, reporting, and corrections. The employer has to follow the written plan. A benefit that exists only in a payroll manual is not a benefit.

The administrative load is where the proposal gets specific. Employers must give eligible workers reasonable notice of the program and its terms, plus an annual statement of contributions made on their behalf. The proposal says the annual statement requirement can be met by reporting Trump Account contributions in Box 12 of Form W-2 using code 'TA.'

The verification rules deserve a close read. Employers can rely on written employee certifications for some information, such as a beneficiary's relationship and date of birth. But certifications alone are not enough to confirm the account is a valid Trump Account. The proposal requires a method reasonably designed to verify the account using trustee information — a check that the account meets the statutory definition before money moves.

For advisors, the practical question is what to tell a business owner who wants to add Trump Account contributions as a recruiting or retention feature. The honest answer: read the proposed rules, and remember they are proposed. Comments are open, and the final version could shift. The core design — written plan, eligibility terms, employee certification, account verification, W-2 reporting — is unlikely to change in essentials. That gives a business owner something to start modeling.

The value is not in the size of the contribution. $2,500 per employee is small enough that it rarely matters for a wealthy owner. For a small business with several eligible employees, it is a real line item. The benefit sits in the payroll exclusion and in attaching money to a child's long-term account. Advisors who work with business owners can now model the cost and the compliance burden; the proposed rules make that math possible.

The part that will surprise most clients is the nondiscrimination rule. The proposed regulations also cover nondiscrimination for employer-sponsored dependent care assistance programs, a sign that the IRS is treating these benefits under a single set of rules. For Trump Accounts, the practical effect is straightforward: a plan that covers only the owner's children will not qualify for the exclusion. Employers must design eligibility broadly enough to satisfy the rules, or the tax benefit disappears.

That conversation belongs before a client sets up a program. The proposal hands advisors a checklist: written plan, eligibility terms, contribution formula, designation procedures, certifications, notices, reporting, corrections. Each item is a place where a thin process will become an audit issue.

Watching the timeline matters. The comment window gives the industry a chance to shape the details. Advisors with business-owner clients should plan to file comments, or at least track what others submit. The final rules will control, but the proposed version is the best read of the IRS's thinking — and of the compliance cost a client is taking on.