On Tuesday, August 11, 2026, the Treasury Department and the Internal Revenue Service (the IRS) issued a proposed rule (the “Proposed Rule”) laying out several requirements for employer contributions to Trump accounts, a tax-favored savings arrangement that may be established for eligible children under age 18 created by the One Big Beautiful Bill Act. The Proposed Rule builds on earlier guidance published by the IRS.

The Proposed Rule, if finalized after the notice and comment period, would apply to employer contribution plan years beginning on or after the Final Rule is published.

Trump Account Contribution Program requirements

Under Internal Revenue Code (Code) Section 128, employer contributions to a Trump account (Section 128 Contributions) are excluded from an employee’s gross income if made pursuant to a qualified Trump account contribution program that meets the requirements of Code Section 128(c) (Trump Account Contribution Program).

The Proposed Rule provides that a failure to satisfy the following requirements of a Trump Account Contribution Program results in the arrangement failing to be a Trump Account Contribution Program and any contributions under the arrangement being included in the employee’s gross income:

• Written Plan: The employer must establish and follow the terms of the separate written plan document which must specify (i) eligibility classes, (ii) contribution rules (including the contribution amount and whether contributions can be made pursuant to a Code Section125 cafeteria plan), (iii) Trump account designation procedures, (iv) certification, notice and reporting procedures, (v) the plan year, and (vi) correction procedures for administrative failures and alerting participants when amounts designated as Section 128 Contributions are determined to be includible in the participant’s gross income.
• Employee Notice: Employers must provide employees reasonable notice of the availability and terms of the Trump Account Contribution Program.
• Annual Statement: Employers must furnish an annual written statement to employees showing Section 128 Contributions made for an employee during the previous calendar year, which may be satisfied by including this amount on the Form W-2.
• Permitted Contribution Limit: Section 128 Contributions under a Trump Account Contribution Program for a calendar year may not exceed USD2,500 per employee for 2026 and 2027 (adjusted for inflation after 2027), regardless of the employee’s number of dependents. The Proposed Rule notes that an employer may make a separate contribution to a Trump Account outside of the Trump Account Contribution Program that is in excess of this limit, and such contribution is includible in the employee’s gross income and is not a Section 128 Contribution.
• Trump Account Verification: Employers must verify, through a trustee, payroll processor, or other service provider, that contributions are made to valid Trump accounts, and may not rely solely on employee certification for that purpose. However, employers may rely on the employee’s written certification that the beneficiary of the Trump account is their dependent and that the Trump account is in its growth period for that calendar year (i.e. the beneficiary has not yet attained age 18).
• Employee Certification: An employee receiving a Section 128 Contribution must provide a certification that is made in writing (in paper or electronic form) and provides (i) that the beneficiary of the Trump account to which the Section 128 Contribution will be made is the employee or anticipated to be the dependent of the employee for the employee’s taxable year in which the contribution will be made; (ii) the beneficiary’s date of birth; and (iii) there are no facts known to the employee that would make the beneficiary ineligible to receive a contribution to his or her Trump account for that calendar year.
• Contribution Identification: Employers must identify Section 128 Contributions in writing to the trustee when made, provide corrective notice to the trustee in writing if an amount previously identified as a Section 128 Contribution is later determined not to qualify, and adopt procedures to ensure such proper identification and corrective notice to the trustee. A corrective notice provided within 21 calendar days after the employer’s determination is deemed reasonable.
• Prohibition on Trustee Selection: Employers may not limit Section 128 Contributions to Trump accounts held by particular trustees; and
• Coordination with Cafeteria Plans: A cafeteria plan offering Section 128 Contributions may permit salary reductions for contributions to the Trump account of an employee’s dependent, not to the employee’s own Trump account. The cafeteria plan must specifically describe the Trump Account Contribution Program benefit and allow prospective election changes, including revocations, at least monthly.

Nondiscrimination requirements

Trump Account Contribution Programs are subject to nondiscrimination requirements similar to those that apply to Dependent Care Assistance programs under Code Section 129. A failure to satisfy the following nondiscrimination requirements results in contributions to Trump accounts provided to highly compensated employees (HCEs) being included in the HCE’s gross income:

• Contributions and Benefits Test: The Trump Account Contribution Program’s terms must not disproportionately favor HCEs with respect to the amount or value of benefits available.
• Eligibility Test: The Trump Account Contribution Program’s eligibility classification or requirements must not disproportionately exclude non-HCEs (determined under a facts and circumstances analysis or by satisfying a safe harbor); and
• 55% Average Benefits Test: The average benefits provided to non-HCEs under all Trump Account Contribution Programs of the employer as of the last day of the plan year must be at least 55% of the average benefits provided to HCEs.

The Proposed Rule clarifies that for purposes of the 55% Average Benefits Test, an employee is taken into account only if the employee is provided contributions and benefits greater than zero under the Trump Account Contribution Program during the plan year.

The Proposed Rule provides a safe harbor under the Eligibility Test for determining if an employer’s eligibility classification is nondiscriminatory. Under the safe harbor, a Trump Account Contribution Program’s eligibility requirement is nondiscriminatory if the ratio of eligible non-HCEs to eligible HCEs equals or exceeds the safe harbor percentage. The safe harbor percentage is 90% reduced by 3/4 of a percentage point for each whole percentage point by which the non-HCE concentration of the employer exceeds 60%.

Pilot program contribution match safe harbor

In addition, the Proposed Rule provides a safe harbor for Trump Account Contribution Programs that are designed to match the USD1,000 pilot program Trump account contribution provided by the government to eligible dependents under Code Section 6434 (“pilot program matching contributions”). Under this safe harbor, such pilot program matching contributions are disregarded for purposes of the Contributions and Benefits Test and 55% Average Benefits Test described above, provided the pilot program matching contributions are available to all employees on the same terms and conditions. The Eligibility Test still applies to these pilot program matching contributions. For this purpose, an employer may rely on an employee’s certification of a dependent’s date of birth to determine that the employee’s dependent is eligible for the pilot program contribution pursuant to Code Section 6434(c).

Annual contribution limits

The Proposed Rule clarifies that the annual contribution limit for a Trump Account Contribution Program applies per employee—not per child, per Trump account, or per employer—so an employee with multiple dependents or multiple employers has one aggregate limit. However, an employee’s receipt of excess contributions due to participation in Trump Account Contribution Programs sponsored by more than one employer will not cause those separate programs to fail, provided that each program prohibits contributions in excess of the income exclusion limit.

If an employee has more than one dependent with a Trump account, a Trump Account Contribution Program may permit the contribution to be allocated among those accounts, provided that all contributions under all Trump Account Contribution Programs with respect to the employee do not exceed the limit for the calendar year.

The Proposed Rule provides that employers have no compliance obligations with respect to the annual contribution limit under Code § 530A(c)(2) of USD5,000 per account in 2026 and 2027 (adjusted for inflation after 2027). This limit applies across contributions from all sources except rollovers and certain contributions made by the Secretary of the Treasury. The IRS intends to issue a separate proposed rule providing that excess contributions will first be treated as attributable to sources other than Section 128 Contributions and then attributable to Section 128 Contributions.

Federal withholding and payroll tax

Although Section 128 Contributions are excluded from an employee’s gross income, such amounts are still wages and subject to the Federal Insurance Contributions Act (FICA) and Federal Unemployment Tax Act (FUTA). The preamble to the Proposed Rule indicates that Section 128 Contributions are not subject to federal income tax withholding because such withholding is intended to be commensurate with an employee’s income tax liability.

Winston Taylor takeaways

The Proposed Rule provides welcome guidance on many key aspects of Trump Account Contribution Program requirements and administration, including application of the annual limit, rules for offering the programs through a cafeteria plan, nondiscrimination requirements, and employer-sponsor obligations with respect to contributions that are not Section 128 Contributions.

However, the Proposed Rule also prohibits the employer from limiting trustees for the Trump Account Contribution Program and imposes several administrative and recordkeeping requirements on employer-sponsors, including the duty to verify account validity and provide corrective notices to trustees if a contribution that was previously identified as a Section 128 Contribution is ultimately determined not to be a Section 128 Contribution.

Employers considering adopting a Trump Account Contribution Program should consider the options for offering such programs, including whether the program will be offered pursuant to the pilot program matching contribution safe harbor, through employer contributions, or under a cafeteria plan, as well as their ability to administer the program across several trustees.