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Section 128 Trump Account Contribution Program Requirements
December 11, 2025
At-a-Glance
- The IRS and Treasury Department have issued guidance regarding Trump Accounts.
- Employers may contribute up to $2,500 per employee to the employee’s or their dependents’ Trump Accounts.
Introduction
On December 2, 2025, the Treasury Department and IRS issued Notice 2025-68, providing initial guidance on Trump Accounts under the One Big Beautiful Bill Act (OB3). This new individual retirement account is available to children under the age of 18.
Children born between January 1, 2025, and December 31, 2028, will receive a one-time $1,000 contribution from the United States Treasury under a pilot program, and there is a $5,000 cap on total annual contributions, adjusted for inflation.
All Trump Account contributions will begin no earlier than July 4, 2026.
Section 128 Employer Contributions
Under OB3 Section 128, employers may annually contribute up to $2,500 to the Trump Accounts of employees or their dependents under a written Trump Account contribution program. These contributions will be excluded from the employee’s taxable income and will count toward the $5,000 cap on annual contributions. The maximum amount an employer can contribute will be indexed to inflation beginning in 2027.
The $2,500 limit applies per employee, not per dependent, meaning the total employer contribution for all dependents can’t exceed $2,500 per employee per year. Employers may offer contributions through salary reduction under a Section 125 cafeteria plan for dependents’ accounts, but not for the employee’s own account.
W-2 Reporting Requirements
The IRS has issued an early draft of the W-2 form indicating that employer contributions made to Trump Accounts under Section 128 must be reported in Box 12 using code ‘TA’. Guidance on the proper method for reporting employee contributions on the W-2 is still pending.
Next Steps
Employees must establish a Trump Account using Form 4547 or the online application, when released, before making any contributions. The Treasury Department and the IRS will issue proposed regulations addressing coordination between the Trump Account contribution programs and Section 125 cafeteria plans.
Final regulations will follow a comment period, which will end on February 20, 2026.
Thank you for choosing Paylocity as your valued service partner. This information is provided as a courtesy, may change, and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor.
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