Trump accounts are new tax-advantaged savings accounts intended to help children build savings for the future. Employers can support employees and their families by contributing to these accounts, but before offering this benefit, small business owners need to understand the contribution limits, tax rules, and administrative requirements.

What Are Trump Accounts?

Internal Revenue Code Section 530A accounts, also known as Trump accounts, were created under the One Big Beautiful Bill Act of 2025. They are investment accounts for children under the age of 18, with special rules governing contributions, investments, and withdrawals.

How Small Businesses Can Help

You have two options. First, you can contribute directly. You can give up to $2,500 per year to an employee’s dependent’s account without it counting as the employee’s income. That limit adjusts for inflation starting in 2027. Second, you can let employees fund their kids’ accounts with pre-tax pay under a cafeteria plan.

What the New Treasury Guidance Says

Treasury and IRS guidance outlines how businesses can establish and operate employer contribution programs. Small business owners should pay attention to these three areas:

• Plan setup and design: Employers need a written plan explaining who qualifies, how contributions are determined, and how the benefit will operate. Businesses should also decide whether to offer a fixed amount or another contribution structure. Employees must get reasonable notice of this plan and its terms.
• Employee elections and contributions: Employees open the accounts. Employers must verify that a valid account exists before sending money. Employees must be able to change or revoke pre-tax elections at any time during the plan year, at least monthly.
• Administration, reporting, and compliance: Employers will need reliable records of contributions, eligibility, and payments. Payroll systems should properly identify the contributions for tax reporting and help prevent amounts from exceeding applicable limits. Employees must receive a statement of prior contributions by January 31^st of the following year, but if the contribution is properly reported on the employee’s W-2, that can satisfy this requirement.

Understanding Nondiscrimination Testing

Employer contributions to Trump accounts must abide by nondiscrimination rules that are similar to the nondiscrimination rules for dependent care assistance programs (DCAP).

Nondiscrimination rules are intended to ensure the benefit is available fairly across eligible workers and doesn’t favor highly compensated employees.

Before offering Trump account contributions, employers should make sure the benefit doesn’t unfairly favor themselves or higher-paid employees. For example, offering larger contributions to managers or limiting eligibility to certain higher-paying positions could cause the program to fail nondiscrimination testing and jeopardize its tax benefits.

What to Do Now

• Assess whether this makes financial sense for your business and overall employee benefits package.
• Estimate what the program would cost you each year. Check what it means for your payroll and administrative workload. And test it against the nondiscrimination rules before you commit.
• Decide who’s eligible and how much you’ll contribute. A flat amount for everyone keeps things simple.
• Draft the plan document.
• Send employees the details: who qualifies, how much you’ll contribute, and how they sign up.
• Launch the program. Keep an eye out for new guidance from the Treasury and the Department of Labor.