Trump Account Employer Contributions: What HR Needs to Know
The One Big Beautiful Bill Act created a powerful new employee benefit: employers can contribute up to $2,500 per year per employee to Trump Accounts, completely tax-free under IRC §128.
✅ Key point for employers
Employer contributions are per employee, not per dependent child. One employee with three children still receives up to $2,500 total.
How Employer Contributions Work
- Annual limit: $2,500/year per employee
- Tax treatment: Employer contributions are excluded from the employee's gross income under IRC §128
- Cap: Combined employer + employee contributions cannot exceed $5,000/year per account
- Per employee, not per child: The $2,500 limit is per employee, regardless of number of dependents
Why Offer This Benefit?
- Recruitment edge: A unique benefit that competitors may not yet offer
- Retention tool: Employees with children have a strong incentive to stay
- Tax advantage: Contributions are tax-deductible for the employer
- Simple administration: Similar to HSA or 401(k) contributions
- Family-friendly signal: Shows commitment to employees' families
Implementation Steps
- Decide on a contribution amount (up to $2,500/year per employee)
- Update payroll systems to track contributions
- Communicate the benefit to employees
- Coordinate with employees' Trump Account elections (Form 4547)
- Report contributions per IRC §128 requirements
⚠️ Consult a tax professional
The IRS is still issuing guidance on employer reporting requirements. Work with your tax advisor and payroll provider to implement correctly.
Employee Communication Template
Here's a starting point for announcing this benefit to employees:
"Starting [date], [Company] will contribute up to $2,500 per year to eligible Trump Accounts for employees with qualifying children. This contribution is tax-free to you under IRC §128 and helps build your child's financial future. Contact HR to learn more."