New developments in Trump Accounts: What plan sponsors need to know now

Since our previous post for plan sponsors — “Trump Accounts – What are plan sponsors asking?” — several major developments have emerged regarding Trump Accounts, the new federal savings program for children created under the Working Families Tax Cuts Act (as part of the One Big Beautiful Bill). Below is a summary of what has unfolded in recent months. 

Latest developments: What’s new

IRS preliminary guidance released

On December 2, 2025, the IRS issued Notice 2025-68, providing initial clarification on Trump Accounts. The notice answers several foundational questions, but many critical questions remain unanswered, with additional proposed regulations promised to be delivered soon. 

According to Notice 2025-68, Trump Accounts will operate outside traditional retirement plans, while still allowing limited employer and employee involvement through existing benefits frameworks like Section 125 cafeteria plans. The comment period on Notice 2025-68 remains open through February 26, 2026.

Historic charitable commitment from Michael and Susan Dell

Coinciding with the release of Notice 2025-68, Michael and Susan Dell announced a landmark $6.25 billion philanthropic commitment, funding $250 per child for the first 25 million American children age 10 and under living in ZIP codes with median incomes below $150,000. 

This announcement is likely to accelerate early adoption and reinforces the administration’s goal of positioning Trump Accounts as a universal child savings vehicle, not solely a tax-driven benefit.

IRS releases Form 4547

In December, the IRS published Form 4547, Trump Account Election(s). Parents and guardians may use this form to:

• Establish a Trump Account for an eligible child, and
• Elect the $1,000 federal pilot contribution for qualifying children. 

The form would be filed with the 2025 federal tax return for initial eligibility. Guidance also indicates that an online method for the same tasks will be made available this summer. 

Key provisions as of today

During the growth phase of a Trump Account (the period that ends on January 1 of the year the beneficiary turns 18 years old), there are five separate possible sources of contributions. 

1. Employer contributions
   Employers may exclude up to $2,500 per employee per year (indexed after 2027) from employee taxable income for employer contributions to Trump Accounts through a Section 125 cafeteria plan.
   • Direct employer contributions This includes contributions to match the $1,000 federal pilot program contribution. 
   • Salary reduction Notice 2025-68 confirms that Trump Account contributions may be offered through salary reduction under a Section 125 cafeteria plan, for dependents only.

      Key considerations:

• Employees could defer up to $2,500 pre tax, but this limit is reduced by any direct employer contribution (such as matching the federal contribution)
• Nondiscrimination testing will apply
• This limit is per employee — not per child
• Total employer contributions for 2026 cannot exceed $2,500 per employee, regardless of how many eligible children the employee has
• 
  
• This design complicates payroll limits and introduces allocation decisions for employees with multiple eligible dependents.
  
  

2. Government pilot contribution
   Children born between 2025 and 2028 are eligible for the $1,000 federal pilot program contribution, provided a Trump Account is properly established and elected.
   
   
3. Contributions from states, local governments and charities
   Notice 2025-68 refers to these as qualified general contributions. 
   
   
4. Contributions from individuals
   We anticipate that most individual contributions will be made by the parents and grandparents of Trump Account beneficiaries. These contributions are not tax deductible for the contributor. For the Trump Account beneficiary, these contributions create tax basis, so that when eventually withdrawn, the basis will not be taxed but growth above basis will be taxable.
   
   
5. Rollover contributions
   Trump Accounts will be created by Treasury and the initial Trump Account trustee that Treasury selects, but these accounts will be permitted to be rolled over in full to other firms that offer Trump Accounts. 

One account per eligible person

Each eligible child may have only one Trump Account. 

• The account must first be established with Treasury.
• A rollover Trump Account may then be established with a private custodian.
• The rollover account must first be funded with the federal contribution before any additional contributions are accepted.

Flow of contributions

All contributions — employer, individual, or charitable — will be routed first to Treasury, then forwarded to the designated custodian for deposit.

Contribution start date

Trump Accounts cannot receive contributions until July 4, 2026.

This effectively makes the second half of 2026 the earliest operational window for employer and employee funding. 

What plan sponsors should be thinking about now

While many details remain open, plan sponsors should begin evaluating:

• Whether Trump Accounts align with their benefits strategy (especially for employers already offering dependent-focused benefits)
• Administrative complexity, including payroll integration and nondiscrimination testing
• Employee education needs, given overlap with 529s, HSAs, FSAs and dependent care benefits
• Vendor readiness, particularly around Treasury integration and contribution tracking

Importantly, when an employer establishes a Trump Account contribution program, the activities will intersect with existing benefit plan infrastructure — making coordination between payroll, benefits and recordkeeping teams essential.