Joining the Party or Sitting on the Sidelines? What Employers Need to Know About Trump Accounts
- Allison Martinez, née De Tal
- Feb 26
- 4 min read
On Sunday, February 8, 2026, over 100 million people watched the Super Bowl—and many may have been introduced to Trump Accounts (“Accounts”) for the first time. A 30-second commercial stated, “this year every American child gets an investment account” with millions of dollars being pre-funded. The promise of giving kids “free money” surely piqued the interest of children and parents alike. Employers, however, are not all rushing to incorporate Accounts into the suite of benefits offered to employees.
What are the Accounts?
The One, Big, Beautiful Bill Act (“OBBA”) amended the Internal Revenue Code (“Code”) to add provisions related to the establishment of, and contributions to, the Accounts. (See, e.g., Code Sections 128, 139J, 530A, and 6434). In the most simplistic terms, an Account is an individual retirement account that can be established for an “eligible individual” who will not turn 18 before the end of the calendar year when the election to open the Account is made.
Following an election to open an Account, each “eligible child” will receive a $1,000 seed contribution from the U.S. government. To be considered an “eligible child,” a child generally must:
be a “qualifying child” as defined by Code Section 152(c);
have been born from January 1, 2025 through December 31, 2028;
be a U.S. citizen; and
have a Social Security number.
Parents can make an election to open an Account for their children—and claim the $1,000 seed contribution—using Form 4547 that is filed with their 2025 federal income tax return, or by filling out an election online.
When Can Contributions to Accounts Begin?
Contributions to Accounts may begin July 4, 2026. Until then, government agencies, employers, investment managers, and third-party service providers are gearing up for the monumental task of launching Accounts seamlessly. At the ABA’s Midyear Tax Meeting, former government officials confirmed substantial resources were being devoted to the Accounts’ implementation.
In Notice 2025-68, the Department of the Treasury and the Internal Revenue Service announced their intent to propose regulations regarding the Accounts. As of the date of publication, the proposed rules (RIN 1545-BR91 and RIN 1545-BS00) had been received by the White House’s Office of Information and Regulatory Affairs (“ORIA”). Following ORIA’s review, the formal notice and comment period will begin.
Who Can Contribute to the Accounts?
From the date an Account is opened until December 31 of the year before the Account beneficiary turns age 18 (“Growth Period”), only five types of contributions can be made:
Seed Contributions. The limited $1,000 seed contributions from the federal government.
Qualified General Contributions. Contributions from the U.S., states or political subdivisions (e.g., counties), the District of Columbia, Indian tribal governments, or Code Section 501(c)(3) organizations.
Employer Contributions. Employers can make contributions—which are excluded from an employee’s gross income—pursuant to Code Section 128.
Qualified Rollover Contributions. Funds transferred from a prior Account.
Contributions from Other Sources. Contributions from the account beneficiary (i.e., the child), parents, grandparents, or anyone else.
Many donors—from Michael and Susan Dell to Nicki Minaj—and large employers—including BlackRock, Wells Fargo, Uber, and Chipotle—have already pledged to make contributions to Accounts.
How Much Can Be Contributed to an Account?
During the Growth Period, no more than $5,000 (indexed for inflation beginning in 2028) may be contributed each year. The $1,000 seed contribution, qualified general contributions, and qualified rollover contributions do not count towards the annual aggregate $5,000 limit. Employer contributions are capped at $2,500 per employee (not per child), per year (indexed for inflation beginning in 2028) and count towards the $5,000 annual limit.
What do Employers Who Want to Contribute to Accounts Need to Do?
Adopt a Separate Written Plan. Employers adopting an Account contribution program must adopt a “separate written plan” that is “for the exclusive benefit of . . . employees to provide contributions to the . . . [A]ccounts of such employees or dependents of such employees.”
Affirmatively Designate the Contribution. An employer must affirmatively indicate to the Account’s trustee that the contribution is a Code Section 128 contribution that is excludible from the employee’s gross income.
Can Employees Contribute to Accounts via an Employer's Cafeteria Plan?
Generally, an employer’s Code Section 125 cafeteria plan can be amended to allow employees to make salary reduction contributions to their dependent’s(s’) Accounts. The proposed regulations are expected to address how to integrate Accounts into an employer’s cafeteria plan.
How are Accounts Invested?
During the Growth Period, the Accounts may generally only be invested in mutual funds or exchange traded funds that track an index of primarily U.S. companies (e.g., S&P 500), don’t use leverage, don’t have annual fees and expenses of more than 0.1% of the investment fund balance, and other criteria that will be determined by the Secretary of the Treasury. It’s reported that up to three companies may be selected to manage the Accounts—with Robinhood, an online brokerage firm which announced in December 2025 it will match the government’s $1,000 seed contribution, being one of the companies being considered.
When Can Funds in an Account be Withdrawn?
Unlike traditional IRAs, beneficiaries generally cannot access their Accounts during the growth period. Beginning on January 1 of the year when the Account beneficiary will turn 18, distributions are generally subject to the same rules as a traditional IRA (e.g., Code Section 72(t)’s 10% additional tax on early distributions).
What’s Next?
Hurry up and wait for additional guidance. While many employers have publicly announced their intent to contribute to Accounts, the vast majority are waiting on more guidance to determine how the Accounts will operate in conjunction with existing benefits offered to employees.
We will continue to monitor developments in this area. If you have any questions regarding Accounts or other benefit options, please contact your Boutwell Fay attorney.
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