On August 11, 2026, the Treasury Department and the IRS issued proposed regulations (IR-2026-90, REG-101355-26) explaining how employers may contribute to Trump Accounts, the new tax-advantaged accounts for children created under the One Big Beautiful Bill Act. The guidance answers a question many families had been guessing at, and the answer is narrower than a lot of people assumed.
The Cap Follows the Worker
Employers can contribute up to $2,500 per year to Trump Accounts on a tax-free basis. The proposed regulations clarify that this limit applies per employee, not per child. In the IRS's own framing, the limit applies to the employee rather than on a dependent-by-dependent basis.
That distinction matters in two common situations:
- Multiple children. A parent with three kids can split employer contributions among their accounts, but the total across all of them cannot exceed $2,500.
- Multiple jobs. An employee who works for two employers that both offer the benefit can still only exclude $2,500 in total for the year.
The employer contribution is not additive to the account's overall cap either. Trump Accounts accept a combined $5,000 per child per year from individuals and employers, a figure that gets indexed for inflation in $100 increments after 2027. The $2,500 employer piece counts toward that $5,000, so it displaces rather than supplements family contributions. The separate $1,000 federal pilot deposit for children born between 2025 and 2028 does not count against the annual cap.
What Employers Have to Do
A qualifying program is not informal. Employers must maintain a separate written plan for the exclusive benefit of employees, and eligibility, contributions, and benefits cannot discriminate in favor of highly compensated employees or their dependents. The proposed rules include a nondiscrimination safe harbor for employers that simply match the government's $1,000 pilot contribution, which gives smaller companies a low-complexity way to participate.
Employers may also let workers fund a dependent's account through salary reduction under a Section 125 cafeteria plan, with elections changeable at least monthly. Notably, the IRS declined to allow employees to fund their own Trump Account this way, concluding it would amount to impermissible deferred compensation.
The Basis Trap Long-Term Savers Should Understand
Here is the part that gets overlooked. Only contributions from individuals create tax basis in the account. Federal seed money, employer contributions, and charitable donations are fully taxable on withdrawal, along with all earnings.
The Center for Retirement Research illustrates the math: a $40,000 account containing $4,000 of parent contributions leaves only that $4,000 tax-free — the other $36,000 is taxable income when withdrawn. Employer money is genuinely valuable, but it behaves like pre-tax retirement savings, not like a Roth.
Practical Takeaways
- Coordinate before you contribute. If your employer offers the benefit, count it against the $5,000 cap before writing your own checks.
- Two working parents should compare plans. Because the cap is per employee, each parent may be able to claim their own $2,500 — but only if both employers offer a qualifying program.
- Watch the conversion window at 18. Once the growth period ends, standard IRA rules apply and the balance can move to a traditional or Roth IRA. A young adult with little taxable income may be in an unusually good position to convert to a Roth and lock in decades of tax-free growth.
- Expect modest returns during childhood. Assets must sit in index mutual funds or ETFs tracking primarily U.S. companies with expense ratios under 0.10%, which keeps costs low but limits diversification.
The rules are not final. Treasury is accepting comments through September 25, 2026, with a public hearing scheduled for October 15, 2026. The agencies estimate the program touches roughly 73 million children, 44 million families, and 3 million employers, so the details are still worth watching.
Sources: IRS Newsroom (IR-2026-90), Journal of Accountancy, Center for Retirement Research at Boston College, Bipartisan Policy Center