American families could soon have a new way to put thousands of dollars toward their children’s future without handing Uncle Sam a cut first, thanks to new Treasury Department guidance governing Trump Accounts.
The Treasury Department released rules Tuesday explaining how employers can participate in the newly launched program. Under the guidance, companies can contribute up to $2,500 per year to Trump Accounts for employees or their dependent children without those contributions being treated as taxable income for the worker.
That is a potentially significant benefit for working parents. Instead of receiving additional compensation and watching part of it disappear into taxes before investing what remains, qualifying employer contributions can go directly toward a child’s long-term investment account.
Treasury Secretary Scott Bessent summed up the administration’s goal.
“Trump Accounts are giving American families a new way to build wealth from day one,” Bessent said Tuesday. “Today, Treasury is publishing guidance that will help families grow Trump Accounts by allowing employers to contribute up to $2,500 tax-free each year for employees’ dependents and giving employees the option to contribute pre-tax dollars directly to those accounts.”
The second part could prove particularly attractive. Employers can establish programs allowing workers to direct pre-tax paycheck dollars into Trump Accounts for their dependents. For parents already trying to save for their children, that creates another tax-advantaged route for turning current earnings into future investments.
Trump Accounts were created through President Trump’s Working Families Tax Cuts and are structured as long-term investment accounts 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 $5,000 annually. Employer contributions of up to $2,500 count toward that limit, but qualifying contributions can be excluded from an employee’s taxable income. Contribution limits are scheduled to begin adjusting for inflation after 2027.
There is also an additional perk for the youngest Americans.
Eligible U.S. citizen children born from January 1, 2025, through December 31, 2028, can receive a one-time $1,000 federal contribution after the required election is made to establish a Trump Account. Better still, that initial government contribution does not eat into the regular $5,000 annual limit.
The money is designed to grow, not collect dust in what amounts to a glorified piggy bank. Funds must be invested in qualifying mutual funds or exchange-traded funds tracking the S&P 500 or another approved index consisting primarily of American companies.
Treasury’s new guidance is also aimed squarely at getting private employers involved. Businesses offering Trump Account contributions will need a separate written plan, employee notices and annual statements, along with appropriate reporting to the account trustee. Employers can generally rely on workers to certify a beneficiary’s age and dependent status while still verifying that the money is going into a qualifying account.
Corporate participation could make the program considerably more powerful. Treasury says more than 50 companies have already committed to Trump Account contributions.
Chime CEO Chris Britt said his company plans to provide an employee match. Franklin Templeton intends to match the federal government’s $1,000 contribution for eligible children of U.S. employees. State Street has announced a similar match for eligible children of active employees, while Vanguard plans to allow workers beginning in 2027 to direct a $1,500 employer contribution from an existing benefits program into an eligible Trump Account. Visa also plans to match the government’s one-time $1,000 contribution for eligible U.S. employees.
The concept is refreshingly straightforward: encourage parents, employers and the government to put money into investments for children early enough that compound growth has decades to work.
Washington has certainly invented more complicated ways to spend money. Trump Accounts instead try to give families an incentive to save, invest and build assets for the next generation. For parents whose employers participate, thousands of tax-advantaged dollars could now be available for exactly that purpose.
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