A new federal savings program — commonly referred to as “Trump Accounts” — was established under the One Big Beautiful Bill Act and is aimed at giving American children a financial head start. If your business is considering how this may affect benefits or payroll decisions, here’s a clear breakdown of what the accounts are and how employer involvement may work.
What Are “Trump Accounts”?
Trump Accounts are tax-advantaged investment accounts created for American children under age 18. Under the law:
- The federal government will make a one-time $1,000 seed contribution into a Trump Account for eligible children born between January 1, 2025, and December 31, 2028.
- Families can make additional contributions — currently up to $5,000 per child per year.
- Employers and other parties may also contribute, with employers allowed up to $2,500 annually per employee/child account (part of the $5,000 total annual limit).
The accounts function similarly to a traditional Individual Retirement Account (IRA): contributions can grow tax-deferred over many years and generally are intended to be accessed when the child becomes an adult.
When Can Contributions Begin?
Trump Accounts are expected to be available for families to open starting July 4, 2026. From that date, parents, guardians, employers, and other eligible contributors will be able to make deposits into the account up to the annual limits.
How Employer Contributions Work?
Employers may choose to contribute to Trump Accounts in a few ways:
- Direct contributions on behalf of an employee’s child (up to $2,500 per year).
- Matching programs where the employer matches a family’s contribution within the annual limit.
- Payroll-facilitated deposits, similar to 401(k) or HSA payroll deductions (if employer payroll systems allow).
These employer contributions count toward the annual $5,000 limit per child and could be considered part of an employee’s benefits package. Importantly, the federal seed contribution does not count toward that limit.
Possible Uses of Account Funds
Although the accounts are locked until the beneficiary turns 18, once the child reaches adulthood, the funds may be used for a variety of long-term financial goals, including:
- Higher education expenses
- Buying a first home
- Starting a business
- Building retirement savings
This flexibility differentiates Trump Accounts from traditional education-only plans like 529s.
What Employers Should Consider:
If your organization is thinking about participating in Trump Account contributions:
✔ Review payroll capabilities – can your system handle voluntary contributions or matches?
✔ Understand tax reporting impacts – how will employer contributions be treated for tax purposes?
✔ Evaluate benefit communication – clear employee communication will be essential so workers understand eligibility, limits, and use cases.
✔ Consult HR and benefits advisors – as with any new government-related financial program, expert guidance helps avoid compliance missteps.
Key Takeaways for Business Leaders
- Trump Accounts provide a federally backed seed contribution of $1,000 to eligible children.
- Parents, employers, and others can make annual contributions up to legal limits.
- Employer contributions count toward the annual limit but can be a valuable benefit if integrated thoughtfully.
As with any evolving federal program, InnovateHR will continue to monitor legislative and regulatory guidance. If your company wants help evaluating whether and how to integrate Trump Account contributions into benefits or payroll, reach out — our HR Consulting team is here to help!
