IRS Considers Comments on Employer Participation in Trump Accounts

The Internal Revenue Service is considering a flurry of comments from employers about how to participate in funding Trump Accounts for the children of their employees. The comments are in response to a Trump Account regulation proposed this past August. Many questions have been raised about definitions, required documentation, coordination with other contributors, discrimination rules, and other issues.

Among the issues bedeviling employers, especially smaller ones, that want to make Trump Account contributions are:

• The definition of “dependent”—there is concern that the proposed regulation would prevent both individuals in married couples who file separately or both divorced parents from contributing to their child’s Trump Account.
• The proposal’s requirement that an employer have a separate written plan in order to make Trump Account contributions—commenters have asked whether it would be permissible to amend an existing cafeteria plan to comply with this requirement
• Coordination of the Trump Account benefit with other employer-provided benefits triggered multiple comments
• The timing of the applicability of Trump Account nondiscrimination rules (which require companies to make sure the benefit is distributed equitably between highly compensated and nonhighly compensated employees

Trump Accounts can be funded now—the official start date was July 4, 2026, for accounts that parents/guardians set up themselves and for accounts set up by the Administration and claimed by a child’s parent/guardian. The contribution limit is based on a calendar year. Eligibility is based on the child’s age (under 18) as of the end of the year in which the account is active.

Prospects: The Trump Administration is actively promoting participation in Trump Accounts, and the program is supported by some Democrats, too. NAIFA is working with the IRS and Treasury to make sure financial advisors can assist parents/guardians in claiming their children’s Trump Accounts so that they can accept contributions.

Efforts to expand and/or modify the program are anticipated when the new 120^th Congress convenes in January, regardless of which party is in control of the House and Senate. Some Democrats have been critical of the ability (under proposed regulations) of donors to directly contribute individual stocks to a child’s account, for example. More official guidance is expected on the employer issues, and on the kinds of investments that can be made by the Trump Account trustee. The auto-enrollment regulations also have to be finalized.

NAIFA Staff Contact: Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org