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New employee benefits don't come along very often.
That's why the introduction of Trump Accounts has generated so much discussion—not only among parents, but also among employers looking for new ways to support employees and their families.
While much of the conversation has focused on the federal government's $1,000 contribution for eligible children, there's another aspect employers should be paying attention to:
Employers may also be able to contribute to these accounts on behalf of their employees or their employees' dependent children. (1)
Like any new benefit, there are still implementation questions to work through. But for employers looking for family-focused benefits, this is one worth understanding.
What Is a Trump Account?
A Trump Account is a new tax-advantaged investment account created to encourage long-term savings for children.
Eligible U.S. citizen children born between January 1, 2025, and December 31, 2028 may receive a one-time $1,000 federal contribution after a Trump Account is established. Parents, family members, employers, charities, and others may also contribute, subject to annual contribution limits. (2)
During childhood, investments are generally limited to broad U.S. stock market index funds. Beginning in the year the child turns 18, the account transitions to rules similar to those governing a traditional IRA.
What Can the Money Be Used For?
After age 18, qualified withdrawals receive favorable tax treatment for purposes such as higher education, starting a business, purchasing a first home, or other qualifying uses under the program's rules. Non-qualified withdrawals may be taxed differently, so employees should review the current guidance before taking distributions.
Can Employers Contribute?
Current law allows employers to contribute up to $2,500 per employee each year through a written employer contribution program. Those contributions may be made to an employee's Trump Account or to the Trump Account of the employee's dependent. The employer contribution is excluded from the employee's taxable income, subject to the annual limit.
Employer contributions count toward the account's overall annual contribution limit, so coordination with family contributions may be necessary.
Could This Become an Employee Benefit?
Whether Trump Accounts become a widely adopted employee benefit remains to be seen, but they represent another option for employers looking to expand family-focused benefits beyond traditional health insurance and retirement plans.
A contribution to a child's long-term investment account could become another way for employers to invest in employees' families.
For example, an employer might choose to:
- Make a one-time contribution following the birth or adoption of a child.
- Contribute annually as part of a family-focused benefits package.
- Include contributions as part of a broader financial wellness program.
- Offer the benefit alongside other family-support initiatives.
Whether this becomes a common benefit remains to be seen, but it introduces another option for employers looking beyond traditional health insurance and retirement benefits.
Can small businesses offer this benefit?
Potentially, yes. The law does not limit Trump Account contribution programs to large employers. However, employers must establish a written contribution program that satisfies the applicable IRS requirements. Business owners should consult with their tax advisor to determine how the rules apply to their specific ownership structure before implementing the benefit.
What About Taxes?
One of the features employers may find most attractive is the tax treatment.
Employer contributions made through a qualified Trump Account contribution program are generally excluded from the employee's gross income, up to the annual statutory limit.
As with any employer-sponsored benefit, businesses should work with their tax advisor and payroll provider to understand reporting requirements and ensure any contribution program is properly established.
How Employees Can Open a Trump Account
Employees who want to open a Trump Account can do so directly through the IRS.
The process generally takes just a few minutes:
- Create or sign in to an IRS online account using ID.me.
- Complete and submit IRS Form 4547 (Trump Account Election).
- Once the election is processed, follow the instructions provided by the Treasury Department to activate the account and begin making contributions. Eligible children will also receive the one-time $1,000 federal contribution once all eligibility requirements have been met.
For the most current instructions, employees can visit:
How Should Employers Communicate This Benefit?
If an employer decides to offer Trump Account contributions, communication will be just as important as the benefit itself.
Like any new benefit, employees won't automatically understand how these accounts work or whether they're eligible. Clear communication will be essential.
Consider introducing the benefit through:
- New hire orientation
- Open Enrollment communications
- Birth or adoption announcements
- Family benefits guides
- Financial wellness resources
- HR newsletters
The goal isn't simply to announce the benefit—it's to explain how it fits into an employee's broader financial future.
Beyond the Dollars
While the financial contribution itself is meaningful, another potential benefit is introducing children to long-term investing at an early age.
For many families, a Trump Account could become an opportunity to teach children about saving, compound growth, and investing for the future. Rather than viewing the account as a one-time government contribution, parents can use it to start conversations about financial responsibility and the value of long-term investing.
Even if a family contributes nothing beyond the initial government contribution, the account has the potential to grow over time through long-term investing. Families who make small, consistent contributions throughout childhood may see significantly larger balances by the time the child reaches adulthood, illustrating the power of compound growth.
Trump Accounts are still new, and additional guidance will likely continue to emerge as employers begin implementing contribution programs.
Whether these accounts become a widely adopted employee benefit remains to be seen. However, they represent an interesting new option for employers looking to support employees beyond traditional health and welfare benefits.
As with any emerging benefit, the best first step isn't deciding whether to offer it—it's understanding how it works and determining whether it aligns with your organization's goals and workforce.
Questions Employers Should Consider
Before implementing a Trump Account contribution program, employers should think through several practical questions:
- Who will be eligible?
- Will contributions be made annually or only after a qualifying event, such as the birth or adoption of a child?
- How will employee eligibility be verified?
- How will the benefit be communicated?
- How will contributions fit into the organization's overall benefits philosophy?
Like any benefit, success depends on thoughtful planning and clear communication.
As new benefit opportunities emerge, it's important to evaluate not only what they offer, but also how they align with your organization's culture, workforce, and long-term benefits strategy. At Royal Benefits Group, we help employers stay informed about new legislation, evaluate emerging benefit options, and determine whether they make sense for their employees. Whether it's traditional health benefits or new programs like Trump Accounts, our goal is to help you build a benefits package that supports your employees and your business.
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