Trump Accounts: Treasury allows employers to contribute up to $2,500 tax-free for employees' dependents
The new guidance provides a framework for employers that want to contribute directly to Trump Accounts for employees or their dependents. Treasury Secretary Scott Bessent said the rules will allow employers to contribute up to $2,500 tax-free each year for employees' dependents.
On August 11, the US Department of the Treasury and Internal Revenue Service (IRS) released guidance on employer-sponsored Trump Account contribution programs, offering employees the ability to make pre-tax contributions to accounts set up for their dependents. Treasury Secretary Scott Bessent stated that this framework enables employers to contribute up to $2,500 tax-free per year for employees and their dependents.
Employees have the option to make pre-tax contributions to their dependents' Trump Accounts via an employer cafeteria plan under the Working Families Tax Cuts. The new rules also permit certain employer contributions to these accounts to be excluded from the employee's gross income. Over 50 companies have already committed to contributing to Trump Accounts for their employees, with the Treasury anticipating further adoption of this tax-preferred benefit.
Companies seeking to establish a Trump Account contribution program must maintain a separate written plan and adhere to specific administrative requirements. These include certification procedures covering the beneficiary's age and dependent status, verification that the account receiving the contribution is a Trump Account, providing notices to employees, providing annual statements to employees, and reporting contributions to the Trump Account trustee.
The proposed regulations also require employer programs to comply with nondiscrimination rules, preventing preferential treatment for highly compensated employees or their dependents.
Public comments on the proposed regulations are due by September 25, 2026, with a public hearing scheduled for October 15, 2026. Parents, guardians, and authorized individuals can open a Trump Account for a child using an IRS Individual Online Account to complete Form 4547 before the child turns 18. Eligible parents or authorized individuals can elect a $1,000 Treasury contribution for a child born between 2025 and 2028 through Form 4547.
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