Enacted into law as part of the 2025 budget reconciliation act and as initially described in an earlier Thompson Hine blog post, Trump accounts will provide a new private savings vehicle for the exclusive benefit of eligible minor children. The IRS recently issued Notice 2025-68 to provide additional detail on Trump accounts while proposed regulations are in the works.  While there are still several unanswered questions regarding implementation and administration of Trump accounts, the guidance provides employers more clarity on how they can include Trump account contributions among the benefits offered to employees. The IRS included a comment request in Notice 2025-68 on several issues regarding these accounts, and we expect additional guidance from IRS in the future.

Overview

Put simply, Trump accounts are traditional IRAs with some twists, including:

• Employers can contribute to Trump accounts for their employees or their employees’ dependents, either directly or through a related foundation;
• Employers can also provide employees with an opportunity to contribute to Trump accounts for their dependents through a cafeteria plan;
• Any eligible child born from 2025 – 2028 can receive $1,000 in seed money for their Trump account as part of a Federal pilot program if a prescribed election is made on their behalf;
• During the child’s “growth period” (beginning with the establishment of the Trump account and ending December 31 of the calendar year before the year the child turns age 18), special rules apply to contributions, eligible investments, distributions, and reporting; and
• After the growth period, traditional IRA rules generally apply, subject to two continuing constraints: no SEP or SIMPLE contributions are ever permitted, and Trump accounts remain separately aggregated for basis-allocation purposes.

In addition to the one-time elective $1,000 pilot program contribution for eligible children born in 2025 through 2028 described above, permissible contributions are limited to:

• Qualified general contributions by a government or tax-exempt entity for the benefit of an eligible class of children in equal amounts;
• A qualified rollover from another Trump account for the same eligible child; and
• Subject to an aggregate $5,000 cap:
  • Under a written program established by an employer, employer contributions of up to $2,500 per employee per year, some or all of which may be offered via salary reduction under a cafeteria plan; and
  • Contributions made by parents, relatives, friends, or other third parties.

No contribution of any type may be accepted before July 4, 2026, and the $2,500 and $5,000 contribution limits are subject to cost of living adjustments after 2027.

Eligibility for and Establishment of Trump Accounts

A child is eligible to have a Trump Account established on his or her behalf if the child has been issued a social security number and will not attain age 18 by the end of the calendar year in which the account is established.

To establish a Trump account,  an authorized individual (generally a legal guardian or parent) must elect to open an initial Trump account for the eligible child before the beginning of the calendar year in which the child reaches age 18 using IRS Form 4547 (with the filing of the authorized individual’s tax return) or an online tool at trumpaccounts.gov, which is expected to be available in mid-2026. The Treasury Department will create an initial Trump account for each eligible individual following a valid election. For 2026, elections may first be made with the filing of the 2025 return or, once available, through the online tool.

Note:  It appears that employers cannot make contributions to a Trump account until the initial account has been established as described above.  Unlike HSA contributions, where an HSA can be established with an HSA custodian selected by the employer, an initial Trump account must be established for the benefit of the eligible child through the Treasury Department. Currently, it is not clear whether an employer could require a subsequent Trump account to be established with a trustee approved by the employer. If that ultimately were permitted, the entire balance of the initial Trump account would be required to be rolled over to the subsequent Trump account because only one Trump account may be open for an eligible child at any time.

Employer Contribution Program

Employers that wish to offer contributions to their employees’ Trump accounts must establish a written Trump account contribution program.  IRS Notice 2025-68 did not provide significant additional detail on how an employer contribution program should be designed or operated.  However, we do know the following:

• An employer may choose to make a nonelective employer contribution to the Trump account of an employee or an employee’s dependent.
• An employer may allow an employee to make a pre-tax contribution to the Trump account of the employee’s dependent. An employee will not be permitted to make pre-tax contributions to his or her own Trump account.
• Regardless of whether the contribution is funded by the employer or by the employee’s pre-tax salary reduction:
  • Such contributions in the aggregate must be limited to $2,500 per employee (not per dependent) per year (as adjusted for inflation after 2027).
  • Such contributions will count toward the $5,000 annual contribution limit for Trump accounts (as adjusted for inflation after 2027).
  • The employer must designate the contribution as a “Section 128 employer contribution” when remitting the funds to the Trump account trustee.
• The Departments of Labor and Treasury expect to issue guidance to explain how an employer Trump account contribution program can be established to be exempt from ERISA, which guidance would seem likely to be based on or substantially similar to existing guidance issued for other purposes.
• The Treasury Department expects to issue guidance to explain how employer Trump account contribution programs will coordinate with cafeteria plans.

Contributions During the Growth Period

Contributions during the growth period fall into five buckets: employer contributions under Code section 128 (as described above); pilot program contributions; qualified general contributions; qualified rollover contributions; and all other contributions. Contributions during the growth period are not included in the beneficiary’s gross income when made; however, basis treatment depends on the contribution type.

• Employer contributions. As noted above, employers may contribute up to $2,500 per employee per year (indexed after 2027) directly to Trump accounts of the employee or the employee’s dependents under a written Trump account contribution program. These contributions are excluded from the employee’s gross income and do not create basis in the beneficiary’s Trump account.
  
• Pilot program contributions. Upon a valid election under Code section 6434, Treasury deposits $1,000 into the Trump account of an eligible child, defined as a qualifying child born in 2025–2028, who is a U.S. citizen, and for whom no prior pilot election has been made, provided the election includes the child’s SSN issued before the election. The deposit is not subject to offset or levy and is subject to a special interest rule; improper elections are penalized. The deposit does not create basis in the account. The earliest deposit date is July 4, 2026. Treasury will fund as soon as practicable after a valid election and account opening is confirmed.
  
• Qualified general contributions. A state or the United States (excluding possessions and their subdivisions), the District of Columbia, an Indian tribal government, or a section 501(c)(3) organization may, upon an application to Treasury, make what is referred to as a “general funding contribution” to the Treasury Department to fund qualified general contributions by Treasury to the Trump accounts of eligible children. The contributor specifies the amount of contribution and the qualified class of eligible children, which initially can be all eligible children in their growth period nationwide; all eligible children in a specified state or states (including the District of Columbia); or all eligible children born in specified calendar years. The law provides that other qualified geographic areas may also be designated, however Treasury and IRS will not designate other geographic areas until a later date and have requested comments on this issue. Contributors of qualified general contributions may not impose eligibility criteria that are not specified in the law.
  
  For 2026–2027, applications to Treasury must provide for at least $25 per eligible child in the chosen class and will be administered quarterly based on class membership at the start of the quarter. These amounts are excluded from income and do not create basis. Among other possibilities, qualified general contributions provide an opportunity for philanthropic private wealth transfer to eligible children.  Indeed, the first such contribution has already been announced by the White House on December 2, 2025 that as described would benefit certain eligible children under 10 years old nationwide. 
  
• Qualified rollover contributions. A direct, trustee-to-trustee transfer of the entire balance from one Trump account to another Trump account for the same beneficiary during the growth period. Only one funded Trump account can exist for the beneficiary at any time. Any trailing dividend received after the rollover must be promptly transferred to the receiving account and treated as part of the original rollover. After a qualified rollover, the transferring account must close within a reasonable period and accept no new contributions. Basis carries over to the receiving account. After the growth period, qualified rollovers to new “rollover Trump accounts” are not permitted.
  
• Other contributions. Any other cash deposits from the beneficiary, parents, family, or third parties are permitted even if the beneficiary has no compensation. These contributions create basis in the account and count against the $5,000 annual cap.

Annual limit and timing. The aggregate annual limit on non-exempt contributions (that is, employer contributions under Code section 128 plus all other non-exempt contributions) is $5,000 per calendar year during the growth period for 2026 and 2027, with inflation adjustments thereafter. The usual IRA “by tax return due date” timing rule does not apply during the growth period; a contribution is counted in the calendar year it is actually made. Contributions to a Trump account during the growth period are not considered in applying contribution limits to other IRAs.

Contribution Comparison Summary

Contribution type	Applied to $5,000 annual cap?	Features
Employer contributions (section 128 program)	Yes	• Excluded from employee’s income up to $2,500 (indexed after 2027) • Excluded from basis • Must be made under a written section 128 Trump account contribution program • Employer must affirmatively identify the remittance • May be offered via a section 125 cafeteria plan only for contributions to a dependent’s Trump account
Parent/family/third-party cash contributions	Yes	• Aggregated for purposes of the annual cap across all deposits for the year • Creates basis
Qualified rollover contribution	No	• Must be a direct trustee-to-trustee transfer of the entire balance from one Trump account to another Trump account for the same beneficiary • Basis carries over • Any trailing dividend is promptly transferred and treated as part of the rollover • Transferring account must close within a reasonable period and accept no new contributions • Only permitted during the growth period
Qualified general contribution (Treasury-allocated from governmental/501(c)(3) funding)	No	• Equal-share allocations to a qualified class, based on geographic area or year of birth • For 2026–2027, minimum application of at least $25 per beneficiary in the class • Administered quarterly based on class membership at the start of the quarter • Excluded from basis
Pilot program contribution of $1,000 (section 6434)	No	• Election requires the child’s SSN issued before the election and may be made on Form 4547 or online • Deposit no earlier than July 4, 2026 and made as soon as practicable after verification • Protected from offset/levy • Penalties apply for negligent or fraudulent elections • Excluded from basis

Trustee procedures. Trustees must maintain procedures to prevent acceptance of any contribution that would cause non-exempt contributions to exceed the annual cap. Treasury is considering permitting trustees to stage incoming deposits in a general account and transfer only the permitted amount to the Trump account, returning any excess without treating it as an excess-contribution distribution. Trustees must also be able to identify contribution sources for reporting, as described below.

Excess contributions. If non-exempt contributions exceed the cap and are not screened out by trustee procedures, excess amounts may be distributed tax-free to the beneficiary as corrective distributions; however, the net income attributable to the excess is subject to a 100% tax.

Investment Restrictions During the Growth Period

Trustee procedures. During the growth period, trustees must offer only eligible investments; select a default eligible investment; promptly invest uninvested cash into the default unless otherwise directed; and maintain reasonable ongoing monitoring to ensure funds remain eligible, including procedures to address funds that cease to qualify (e.g., sell and reinvest proceeds in an eligible alternative). Money market funds and cash are not eligible investments; however, cash may be held briefly to complete transactions or reinvest dividends. Treasury is considering safe harbors for monitoring frequency and remediation.

Eligible Investments. During the growth period, account assets must be invested only in “eligible investments,” defined narrowly to protect minors:

• Eligible investments must be mutual funds or ETFs that (1) track a “qualified index,” (2) do not use leverage, (3) have annual fees and expenses not exceeding 0.10% of the invested balance, and (4) satisfy any additional criteria set by Treasury
• A “qualified index” includes the S&P 500 and other equity indexes comprised primarily of U.S. companies for which regulated futures contracts trade on a qualified exchange. Sector/industry specific indexes are not allowed; market cap based broad indexes may qualify

Some additional detail regarding eligible investments is included in Notice 2025-68.  These constraints provide broad diversification, avoid concentrated thematic risks, prevent leverage amplified volatility and decay, reduce active manager and behavioral risks, and ensure liquidity and transparency within well-regulated fund structures. They also simplify trustee due diligence and administration for a child focused account type. The restrictions lift in the calendar year the beneficiary turns 18, restoring investment flexibility to the now adult owner.

Reporting and Administration

Trump accounts are not subject to Code section 408(i) during the growth period. Instead, specialized reporting under Code section 530A(i) applies. Trustees must provide annual reporting to Treasury and the beneficiary regarding: aggregate contributions categorized as (1) exempt (qualified rollovers, pilot program, qualified general contributions), (2) Code section 128 employer contributions, and (3) other contributions; distributions, including qualified rollovers; fair market value; and basis. Trustees also must track and report the amount and identity of a general funding contributor if the contributor elects to be identified. Failure to report is penalized unless due to reasonable cause.

Distributions and Transfers

During the growth period, distributions are prohibited except for: qualified rollover contributions between Trump accounts; qualified ABLE rollover contributions; corrective distributions of excess contributions; and distributions upon the death of the beneficiary. A qualified ABLE rollover contribution is a trustee-to-trustee transfer of the entire Trump account balance during the beneficiary’s age-17 calendar year into the beneficiary’s own ABLE account; it is excluded from ABLE annual contribution limits. No hardship distributions are permitted, and accounts cannot be closed during the growth period other than via a permitted rollover or upon death. Trustees must maintain procedures to enforce distribution prohibitions and to process permitted transfers. Treasury is evaluating withholding applicability on in-period distributions other than qualified rollovers.

If the beneficiary dies during the growth period, the account ceases to be a Trump account and an IRA as of the date of death, and the account is treated as distributed at fair market value (reduced by basis) to the recipient (or to the decedent’s final return if received by the estate). If death occurs after the growth period, general IRA post-death rules apply.

After the growth period, distributions generally follow Code sections 408(d) and 72, including potential 10% additional tax under Code section 72(t) unless an exception applies. Trump account basis allocation applies separately from other IRAs. Accordingly, Code section 408(d)(2)’s “one contract” aggregation rule does not aggregate Trump accounts with other IRAs. Trustees may provide, by instrument, for an automatic post-growth period transfer to a non-Trump traditional IRA.

Coordination With Other IRA Rules

After the growth period, Trump accounts are generally subject to Code section 408 rules on contributions, distributions, RMDs, rollovers, conversions, and reporting, subject to two continuing differences: they may never accept SEP or SIMPLE contributions, and they remain separately aggregated from other IRAs for purposes of Code section 408(d)(2). Before the growth period ends, contributions to a Trump account do not count toward the individual’s limits for other IRAs. Post-growth period rollovers and transfers follow ordinary IRA rules, with limitations if basis is present and the destination is an “eligible retirement plan” other than an IRA.

Open Items and Forthcoming Guidance

Notice 2025-68 announces Treasury’s intent to propose regulations consistent with the guidance included therein and requests comments on numerous open items/questions. We expect further guidance quickly; the Notice indicates that proposed regulations on certain items may be issued before the comment period ends.

Thompson Hine Takeaways

Employers may have enough information to determine whether there is interest in adopting a Trump account contribution program, but the devil will be in the details.  While Notice 2025-68 answers many questions, there are several outstanding issues that remain unclear and unaddressed by the guidance.  In particular, employers still need to understand:

• Whether an employer can limit the Trump account trustees to which the employer remits contributions under a Trump account contribution program under Code Section 128,
• What employers must do to ensure an employer Trump account contribution program is exempt from ERISA,
• How employer Trump account contribution programs will coordinate with cafeteria plans,
• An employer’s duty, if any, to verify a Trump account is being administered by an approved Trustee in accordance with law and applicable guidance.

Notice 2025-68 announces Treasury’s intent to propose regulations consistent with the guidance included therein and requests comments on numerous open items and questions. We expect further guidance quickly; the Notice indicates that proposed regulations on certain items may be issued before the comment period ends. Employers who are interested may wish to start planning now based on what is known so that, for example, a program can be put into place under a cafeteria plan in time for open enrollment near the end of 2026 or for an employer contribution during 2027. 

Please contact the authors or your Thompson Hine attorney with any questions.