Eagles, Benefits By Design, Inc. is a boutique administrative services firm focusing on solving employee benefit problems of large employers. We specialize in Dental, Consumer Directed Healthcare Accounts (Trump, HSA, FSA, HRA, DCAP, ICHRA, etc), and COBRA.
Trump Accounts (IRC §530A) – Employer/Employee Contribution Rules
(IRS Notice 2025-68)
Reference summary for HR, payroll, and Section 125 administration
Updated: January 7, 2026
Disclaimer: This document is for informational purposes only and is not legal or tax advice. Consult counsel and your plan administrator for implementation.
A Trump Account is a type of traditional individual retirement account (IRA) established for the exclusive benefit of an eligible individual under age 18 and designated as a Trump Account at establishment. Special rules apply during the “growth period,” which generally ends before January 1 of the calendar year in which the beneficiary turns 18 (Notice 2025-68, Section II).
· Growth period: Special contribution, investment, and distribution restrictions apply until the end of the year before the beneficiary turns 18 (Notice 2025-68, Section II).
· After the growth period: The account generally is treated as a traditional IRA and generally is subject to the same rules as other traditional IRAs (IR-2025-117; Notice 2025-68, Section II).
· No contributions may be accepted before July 4, 2026 (Notice 2025-68, Section II; Q&A C-1).
· Pilot program deposits (if applicable) are made no earlier than July 4, 2026 (Notice 2025-68, Q&A B-2).
Notice 2025-68 describes five broad categories of contributions to a Trump Account during the growth period (Notice 2025-68, Section II):
· Pilot program contributions (one-time $1,000 deposit for eligible children in the pilot program).
· Qualified general contributions (from certain governmental entities and 501(c)(3) organizations via Treasury).
· Section 128 employer contributions (made under an employer’s Trump Account contribution program).
· Qualified rollover contributions (trustee-to-trustee transfer from another Trump Account).
· Contributions from other sources (such as parents/guardians/any person, including the child).
During the growth period, the rules distinguish between “exempt contributions” and all other contributions:
· Not subject to the annual contribution limit: pilot program contributions, qualified general contributions, and qualified rollover contributions (Notice 2025-68, Section II).
· Subject to the annual contribution limit: section 128 employer contributions and contributions from other sources (Notice 2025-68, Section II).
Aggregate annual limit: All non-exempt contributions during the growth period are subject to an aggregate annual limit of $5,000 per beneficiary per year (indexed for cost-of-living adjustments after 2027) (Notice 2025-68, Section II; Q&A C-1).
· An employer may contribute to the Trump Account of an employee or the employee’s dependent pursuant to a Trump Account contribution program (IRC §128; Notice 2025-68, Section I).
· Up to $2,500 per employee per calendar year may be excluded from the employee’s gross income (indexed after 2027) (Notice 2025-68, Q&A I-1).
· The $2,500 limit is per employee (not per dependent). An employee with multiple children may still have only $2,500 total excluded for that year (Notice 2025-68, Q&A I-1).
· Employer §128 contributions count toward the $5,000 aggregate annual limit during the growth period (IR-2025-117, Dec. 2, 2025).
· Parents/guardians/any person may make contributions as “other sources,” subject to the $5,000 aggregate annual limit during the growth period (Notice 2025-68, Section II).
· Contributions from other sources during the growth period create basis in the account (Notice 2025-68, Section II).
Notice 2025-68 permits a Trump Account contribution program to be offered via salary reduction under a Section 125 cafeteria plan, but only in certain circumstances (Notice 2025-68, Q&A I-3):
· Permitted: Salary reduction contributions made to the Trump Account of the employee’s dependent (Notice 2025-68, Q&A I-3).
· Not permitted: Salary reduction contributions made to the Trump Account of the employee (treated as deferred compensation under Section 125) (Notice 2025-68, Q&A I-3).
Practical impact: If salary reduction is used, those amounts are made “pursuant to a Trump Account contribution program” and therefore are generally treated as employer-paid contributions under §128 for exclusion purposes. Accordingly, the combined total of employer-paid contributions under the program (including any employee-funded salary reductions that flow through the program) cannot exceed the $2,500 per-employee annual exclusion limit (Notice 2025-68, §128 discussion; Q&A I-1 and I-3).
1. Example 1 (employer uses full cap): Employer contributes $2,500 to an employee’s child’s Trump Account for 2026. No additional pre-tax salary reduction can be excluded for that employee for 2026 because the annual §128 limit is already used (Notice 2025-68, Q&A I-1). The family/others could still contribute after-tax up to the remaining portion of the $5,000 annual aggregate limit.
2. Example 2 (split employer + salary reduction): Employer contributes $1,500. Employee elects $1,000 salary reduction under the cafeteria plan to the child’s Trump Account. Total under the employer program is $2,500 (max excludible). Others could contribute after-tax up to $2,500 more (subject to the $5,000 annual aggregate cap).
3. Example 3 (employee wants pre-tax to own account): Not allowed under Notice 2025-68, Q&A I-3.
· Eligible investments only: During the growth period, account funds may be invested only in certain mutual funds or ETFs that track an index of primarily U.S. companies (for example, an S&P 500 tracker), with additional restrictions (for example, no leverage and limited fees) (Notice 2025-68, Section II).
· No distributions during growth period, except limited permitted distributions (for example, certain rollovers, excess contributions, or death of the beneficiary) (Notice 2025-68, Q&A E-1).
The “administrator” of the account itself is the trustee/custodian (similar to an IRA trustee). Notice 2025-68 provides:
· The trustee must be a bank (as defined in IRC §408(n)) or another person approved by the IRS to be a nonbank trustee of a Trump Account (Notice 2025-68, Q&A A-3).
· Any person approved by the IRS as of December 31, 2025, to be a nonbank trustee of an IRA under IRC §408(a) is automatically approved to be a nonbank trustee of a Trump Account (Notice 2025-68, Q&A A-3).
· Other persons may request approval following the IRA nonbank trustee approval process (Treas. Reg. §1.408-2(e); Rev. Proc. 2025-4 or successor) (Notice 2025-68, Q&A A-3).
· For initial Trump Accounts, Treasury will select one or more financial institutions as financial agents to serve as trustee (Notice 2025-68, Q&A A-3).
· A Trump Account contribution program must be a separate written plan of the employer for the exclusive benefit of employees (Notice 2025-68, §128 discussion).
· The program is subject to requirements similar to those that apply to dependent care assistance programs (DCAPs) under IRC §129 (e.g., nondiscrimination, eligibility, notice/statement requirements) (Notice 2025-68, Section II).
· When making a §128 employer contribution, the employer must affirmatively indicate to the trustee that the contribution is a §128 employer contribution excludible from the employee’s gross income (Notice 2025-68, Q&A I-2).
· Payroll/benefits should track the per-employee $2,500 annual cap for amounts excludible under §128 (Notice 2025-68, Q&A I-1).
· Limit elections to contributions made to a dependent child’s Trump Account (not the employee’s own account) (Notice 2025-68, Q&A I-3).
· Coordinate with the cafeteria plan administrator/TPA to add the benefit, election forms, and payroll coding consistent with Section 125 rules.
· Ensure employer program contributions + salary reduction amounts are monitored so the total excluded under §128 does not exceed $2,500 per employee per year (Notice 2025-68, Q&A I-1).
· Trustees must have procedures to prevent accepting contributions that would cause contributions to exceed the annual limit and to enforce eligible investment and distribution restrictions during the growth period (Notice 2025-68, Q&As C-1, D-7, E-1).
· Trustees must collect and report the amount and source of certain contributions; employers must identify §128 contributions as such (Notice 2025-68, Q&As C-2, F-3, I-2).
Topic
Rule / Limit
Primary citation
Earliest contribution date
No contributions accepted before July 4, 2026
Notice 2025-68, Section II; Q&A C-1
Annual aggregate limit (growth period)
$5,000 per year for non-exempt contributions (COLA after 2027)
Notice 2025-68, Section II
Employer exclusion limit (per employee)
$2,500 per employee per year excludible under §128 (not per dependent)
Notice 2025-68, Q&A I-1
Section 125 salary reduction allowed?
Yes, but only for contributions to a dependent’s Trump Account; not to the employee’s own account
Notice 2025-68, Q&A I-3
Who can be trustee/custodian?
Bank (§408(n)) or IRS-approved nonbank trustee; IRA nonbank trustees approved by 12/31/2025 are automatically approved
Notice 2025-68, Q&A A-3
Employer must label contributions
Employer must affirmatively indicate to trustee that a contribution is a §128 employer contribution
Notice 2025-68, Q&A I-2
· Internal Revenue Service, Notice 2025-68, “Notice of intent to issue regulations with respect to section 530A Trump accounts,” Dec. 2025 (PDF): https://www.irs.gov/pub/irs-drop/n-25-68.pdf
· Internal Revenue Service, IR-2025-117, “Treasury, IRS issue guidance on Trump Accounts …,” Dec. 2, 2025: https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-trump-accounts-established-under-the-working-families-tax-cuts-notice-announces-upcoming-regulations
Reach out with any questions or to set up a meeting to discover the best path to setting up Trump Account contributions for your employees.
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