IRS Issues Proposed Rules For Employer Contributions to Trump Accounts

At A Glance

• The Treasury Department and IRS have issued proposed regulations that would establish requirements for employers offering Trump Account contribution programs, including plan administration, reporting, and nondiscrimination obligations. 
• Employers considering a contribution program should evaluate the proposed regulations before implementing a program to help prepare for potential administrative and reporting requirements.

Summary

On August 11, 2026, the Treasury Department and IRS released proposed regulations addressing employer contributions to Trump Accounts and the associated nondiscrimination requirements. The guidance outlines proposed requirements that employers should consider when establishing Trump Account contribution programs.

Employer Contributions

Under Internal Revenue Code Section 128, employers may contribute up to $2,500 per employee annually to Trump Accounts on a tax-favored basis. The limit applies on a per-employee basis rather than a per-child basis, meaning employees with multiple children must share the available employer contribution limit across eligible dependents.

If finalized as proposed, the regulations would require employers that offer a Trump Account Contribution Program to:

• Maintain a separate written plan document
• Establish employee certification procedures
• Provide reasonable notice of program availability and terms
• Furnish annual contribution statements 
• Report contributions on Form W-2 using Box 12, Code TA
• Verify contributions are being deposited into valid Trump Accounts
• Communicate required information to account trustees

The proposed regulations would also clarify that self-employed individuals, including sole proprietors, partners, and certain S corporation shareholders, are not eligible to receive Section 128 contributions, although they may sponsor programs for their employees.

Nondiscrimination Requirements

Trump Account programs would be required to comply with nondiscrimination requirements to ensure that benefits are not disproportionately provided to highly compensated employees (HCEs). The proposed regulations would establish rules covering eligibility classifications, benefit availability, testing methodologies, and correction procedures.

If these regulations are finalized, employers could generally satisfy these requirements by providing eligible employees with the same opportunity to participate or receive employer contributions. The proposal also includes an average benefits test, requiring that benefits provided to non-highly compensated employees meet specified thresholds compared with benefits provided to HCEs. 

Importantly, the proposed regulations would create a special safe harbor for employers that match the $1,000 pilot program contribution. Those matching contributions may be disregarded for certain nondiscrimination testing purposes if they are offered on the same terms and conditions to all eligible employees.