By Ian Berger, JD
IRA Analyst
Recent IRS guidance confirms that any employer that wishes to make employer contributions to Trump accounts must comply with several administrative requirements. Especially for small employers, these requirements are likely to be challenging. The guidance came in the form of proposed IRS regulations issued on August 10, 2026.
Employers are permitted to make contributions to the Trump account of either an employee or of an employee’s dependent. These contributions can only be made until December 31 of the year the employee or dependent turns age 17 (i.e., during the “growth period”).
Annual employer contributions up to $2,500 (as indexed) won’t be taxable to the employee in the year they are made. However, those contributions, plus earnings, will be taxable when distributed. The $2,500 annual limit is per employee – not per dependent. For example, if an employer makes contributions to the Trump accounts of an employee’s two dependent children in 2026, the aggregate amount the employer can contribute between the two children is $2,500. Employers can make contributions that exceed the $2,500 limit, but amounts over the limit will be taxable to the employee in the year made.
Employer contributions count towards the $5,000 (as indexed) annual limit that applies to Trump account individual contributions made by parents, grandparents, or other persons during the child’s growth period.
An employer looking to make Trump account contributions will be required to carry out the following administrative steps:
- Establish a separate plan, called a “Trump account contribution program,” whose terms must be set forth in a separate written plan document;
- Notify employees of the availability and terms of the program;
- Provide an annual written statement to employees; and
- Comply with several complicated rules prohibiting discrimination in favor of highly compensated employees.
The proposed regulations clarify that a self-employed individual, such as a sole proprietor or a partner in a partnership, cannot make employer contributions to Trump accounts of his dependent children. However, a self-employed individual with employees can make employer contributions to Trump accounts of dependents of those employees. In addition, a self-employed person can make individual contributions to his own child’s Trump account, i.e., personal contributions that have nothing to do with any business entity. However, individual contributions are not deductible to a self-employed individual (or to any individual), whereas employer contributions are deductible as a business expense.
The IRS guidance confirmed that employer contributions can be offered through employee salary reduction contributions, but only for contributions made to the Trump account of an employee’s dependent – not to the Trump account of the employee.
If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.