Introducing Trump Accounts: A New Employee Benefit to Watch

If you’re looking for new ways to support and retain your workforce, a brand-new benefit option is now available to you and your employees. The recently enacted One Big Beautiful Bill Act (OBBBA) creates a savings vehicle called a Trump account, designed to help families build financial resources for their children’s futures.

While Trump accounts won’t officially launch until January 1, 2026, it’s not too early to start understanding how they work and how employers may be able to contribute.

What Are Trump Accounts?

Trump accounts are federally created savings accounts that parents or other qualifying relatives can open for a child who:

• Has a valid U.S. Social Security number, and
• Is under age 18 at the end of the tax year.

The goal is to help children build cash reserves they can use in adulthood for approved purposes such as:

• Higher education or vocational training
• Starting a small business
• Domestic travel
• Other qualifying expenses (to be clarified by IRS/Treasury)

Contributions and Tax Treatment

• Annual contribution limit: Up to $5,000 per year may be contributed on behalf of each child until the year they turn 18. (This limit may be indexed for inflation.)
• Seed deposit: Children born between January 1, 2025, and December 31, 2028, may qualify for a one-time federal deposit of $1,000.
• Tax treatment: Contributions are not tax-deductible, but account earnings grow tax-deferred. After the child turns 18, withdrawals are tax-free if used for qualifying expenses.

Pending clarification: Agency guidance is expected to clarify whether any restrictions will apply to investment choices (for example, if funds must be held in certain types of mutual or index funds).

Employer Contributions

One of the most notable features of Trump accounts is that employers can contribute to them as a form of employee benefit.

• Employers may contribute up to $2,500 per employee per year (subject to indexing).
• These contributions are expected to be excluded from the employee’s taxable income, which would mean no payroll taxes on the amount contributed.

Pending clarification:

• Deductibility is still uncertain. Some legal and tax experts believe employer contributions will not be deductible as a business expense, while others think they will. The IRS and Treasury have not yet issued final guidance.
• Reporting and plan requirements are also not yet finalized. Employers will likely need to adopt a formal written plan, similar to dependent care or education assistance programs, and comply with nondiscrimination rules.

Timing and Implementation

• Trump accounts are set to become available starting January 1, 2026.
• Guidance from the IRS and Treasury is expected before then on how accounts will be opened, funded, and reported.

Until that guidance is published, employers cannot yet contribute, but can begin planning their programs.

Steps Employers Can Take Now

Even though contributions can’t start until 2026, now is a good time to:

1. Gauge employee interest — would this be valued as a family-friendly benefit?
2. Consult your payroll provider and tax advisor to determine how contributions can be handled in your systems.
3. Begin drafting a plan document outlining who is eligible, contribution amounts, and how the benefit will be administered.
4. Monitor IRS/Treasury updates for rules on deductibility, reporting, and compliance requirements.

The Bottom Line on Trump Accounts

Trump accounts could become a powerful new tool for supporting employees and their families. While the rules are still evolving, now is the time to start learning, planning, and preparing — so you can move quickly once the program officially launches.

CJG is here to help. Reach out to us today to learn more about Trump accounts and the tax updates included in the OBBBA.