The IRS has shared new details about Trump Accounts (TAs)—special savings accounts for kids under 18 created by a law passed in July 2025. These accounts help parents and employers save for a child’s future.
What Are Trump Accounts?
- A TA is like a retirement account, but for minors.
- Parents or guardians can open one for their child.
- Contributions can come from parents, employers, or even government programs.
Employer Contributions
Starting July 4, 2026:
- Employers can contribute up to $2,500 per year to a child’s TA.
- This money is tax-free for the employee.
- The $2,500 limit applies per employee, not per child. So if you have two kids, the total is still $2,500.
Cafeteria Plans
- Employers can offer TA contributions through cafeteria plans (benefit plans where employees choose options).
- Employees can use salary reductions to fund their child’s TA.
- Important: Employees cannot use salary reductions for their own TA—only for their child’s.
What Employers Need to Do
- Tell the TA trustee that the contribution is from a TACP (Trump Account Contribution Program).
- Make sure contributions don’t go over the $2,500 limit.
What’s Next?
The IRS will release more detailed rules soon about:
- How cafeteria plans and TACPs work together.
- Reporting requirements for employers.
Bottom Line:
Trump Accounts give families a new way to save for kids’ futures, and employers can help by contributing tax-free funds. Businesses should start planning now for the July 2026 rollout.
Source: Thompson Reuters