IRS Proposes Employer Trump Account Rules (REG-101355-26)

What just came out?

On August 11, 2026, the IRS and Treasury published proposed regulations in the Federal Register (document 2026-16314) titled Employer Contributions to Trump Accounts and Nondiscrimination Rules for Dependent Care Assistance Programs (REG-101355-26, RIN 1545–BS19).

The package follows IRS Notice 2025-68, which said formal regs on Trump Accounts (including employer §128 programs) were coming. These proposed rules are that next step for employers — plus related updates to dependent care assistance (§129) nondiscrimination rules.

Primary source: Federal Register document 2026-16314. Secondary: public inspection PDF.

Who this affects

• Employers designing or already announcing Trump Account contribution programs
• Employees who may receive tax-free §128 contributions for a child’s account
• HR / payroll / benefits counsel setting written plan terms, notices, and cafeteria elections

Parents who only contribute family money (no employer program) can skim the takeaways. The deep detail is for workplace benefits.

What would a Trump account contribution program require?

Under proposed §1.128-1 and §1.128-2, a qualifying program is a separate written plan of the employer for the exclusive benefit of employees, providing contributions to Trump Accounts of employees or their dependents.

The written plan would need to spell out, among other things:

• Which employees are eligible
• How much the employer contributes and whether §125 salary reduction is allowed
• How the employee designates which Trump Account receives the money
• Required notices, certifications, and reporting
• The plan year and how to fix administrative mistakes

Eligible employees would also need reasonable notification of the program’s availability and terms — similar to dependent care assistance program notice rules.

No trustee lock-in

Only one Trump Account may exist for a child. If Employer A only sends money to Broker X, and the child’s account is already at Broker Y, that family could be shut out of the tax-favored employer contribution.

The proposed regulations would therefore provide that a Trump account contribution program may not restrict contributions to a particular trustee or trustees. That matters for dual-income households and for kids whose accounts opened through the national program partners.

Cafeteria plans: dependents only

Consistent with Notice 2025-68, proposed rules would allow salary reduction under a §125 cafeteria plan only when the contribution goes to a dependent’s Trump Account — not to the employee’s own Trump Account.

The preamble’s logic: putting money in your own Trump Account looks like deferred compensation (generally banned in cafeteria plans). Putting money in your child’s account means you give up control of that pay — so it can fit §125.

The proposal would also let employees make prospective elections and change or revoke them during the plan year (at least monthly, before pay is available), with more detail to be folded into cafeteria-plan regs.

$2,500 limit, multiple kids, multiple employers

The proposed rules restate the statute: for 2026–2027 the §128 exclusion is up to $2,500 per employee per year (indexed after 2027). Key clarifications employers asked for:

• Per employee, not per child. One employee with three kids still has one $2,500 bucket (the plan may allocate across those accounts).
• All employers combined. If you have two jobs offering this benefit, your personal exclusion still caps at $2,500 total.
• Pilot seed matches count. Employer matches of the $1,000 federal pilot contribution count toward the §128 limit like other program contributions.
• Employer + family money still share the child’s $5,000 annual contribution cap under §530A.

Nondiscrimination (high level)

Section 128 requires a Trump account contribution program to meet requirements similar to certain §129 dependent care rules. The proposed package includes detailed nondiscrimination tests and, for some designs (including certain pilot-seed matches), safe-harbor ideas.

In plain terms: if a program favors highly compensated employees improperly, those HCEs may lose the §128 income exclusion. Rank-and-file treatment can differ. This page does not walk through every test — benefits counsel should read the NPRM.

The same document also proposes related nondiscrimination updates for classic dependent care assistance programs (§129). That is a separate HR topic from Trump Accounts; we mention it only so employers know both topics travel together in REG-101355-26.

Comment period and hearing

• Comments: due by September 25, 2026 (use regulations.gov; indicate IRS and REG-101355-26).
• Public hearing: October 15, 2026, at 10 a.m. ET. Speak/outline requests due by September 25, 2026; attendance requests by 5 p.m. ET on October 13, 2026.

What this does not change for parents

• You still must elect a Trump Account (Form 4547 / trumpaccounts.gov). Enrollment is not automatic.
• The $1,000 federal pilot for births 2025–2028 is separate from employer §128 programs.
• No employer program? Family contributions and the pilot rules still apply as before.

Sources: Federal Register document 2026-16314, public inspection PDF, IRS Notice 2025-68. Educational content only — not tax or financial advice.