American families could receive thousands of dollars in tax-free benefits for their children under new Trump administration guidance allowing employers to contribute to Trump Accounts.
The US Treasury Department announced new guidance Tuesday allowing employers to contribute up to $2,500 annually to Trump Accounts belonging to employees or their dependent children without the contribution being included in the employee’s taxable income.
The guidance also allows employers to establish programs through which workers can direct pre-tax money from their paychecks into Trump Accounts for their dependents.
Treasury Secretary Scott Bessent said the changes are intended to expand opportunities for families to build long-term investments for their children.
“Trump Accounts are giving American families a new way to build wealth from day one,” Bessent said.
Bessent said the new guidance would allow employers to contribute up to $2,500 tax-free each year for employees’ dependents while allowing workers to make pre-tax contributions directly to the accounts.
Trump Accounts were established under President Donald Trump’s Working Families Tax Cuts as long-term investment accounts designed for children.
Parents, guardians and other authorized individuals can establish an account for an eligible child before the calendar year in which the child turns 18.
Individuals and employers can generally contribute a combined total of up to $5,000 per year to a child’s Trump Account.
Employer contributions of up to $2,500 count toward the overall $5,000 annual limit but can be excluded from an employee’s taxable income if program requirements are satisfied.
The contribution limits are scheduled to begin adjusting for inflation after 2027.
The program provides an additional benefit for certain younger children.
Eligible US citizen children born between Jan. 1, 2025, and Dec. 31, 2028, can receive a one-time $1,000 contribution from the federal government after an election is made to establish a Trump Account for them.
The government’s $1,000 contribution does not count toward the normal $5,000 annual contribution limit.
Money contributed to the accounts is invested rather than simply being held as cash.
Federal rules generally require Trump Account funds to be invested in qualifying mutual funds or exchange-traded funds that track the S&P 500 or another qualifying index primarily composed of US companies, according to Trending Politics.
Tuesday’s Treasury guidance focuses on expanding employer participation in the program.
Employers seeking to establish a Trump Account contribution program will generally be required to maintain a separate written plan and provide notices and annual statements to participating employees.
Companies will also have reporting obligations involving the trustee overseeing the Trump Account.
Employers can generally rely on workers to certify a beneficiary’s age and dependent status, but companies must ensure that contributions are being directed to qualifying Trump Accounts.
Treasury said more than 50 companies have committed to making contributions to Trump Accounts for their employees.
Several major companies have also announced plans to provide matches or other contributions.
Chime CEO Chris Britt said the financial technology company plans to provide an employee match for Trump Accounts.
Franklin Templeton intends to match the federal government’s one-time $1,000 contribution for eligible children of US employees, while State Street has announced a similar plan for eligible children of active workers.
Vanguard plans to allow employees beginning in 2027 to direct a $1,500 employer contribution from an existing benefits program into an eligible Trump Account.
Visa also plans to offer eligible US employees a company match corresponding to the government’s one-time $1,000 contribution.
The Treasury Department said the new guidance is designed to make it easier for additional businesses to participate while giving families another tax-advantaged method of investing for their children’s futures.
