Beginning in 2026, employers may establish a written Trump Account contribution program under IRC §128 and contribute up to $2,500 per year on behalf of an employee to the Trump Account of the employee or the employee’s qualifying dependent. The $2,500 limit is per employee, not per beneficiary, and is subject to future inflation adjustments.
Qualifying employer contributions are generally excluded from the employee’s taxable income and are not treated as wages. Employers may also offer Trump Account contributions as a benefit through a Section 125 cafeteria plan, allowing employees to elect the Trump Account contribution as part of their available benefit choices.
Note, however, that while the contributions through the employer are a tax-free fringe benefit for the employee, they are subject to Social Security and Medicare (FICA) taxes. The funds for the Trump Account would not appear in Box 1 of the Form W-2 but would be includable in Boxes 3 and 5 along with Code TA in Box 12.
The employer’s program must be in writing and satisfy applicable nondiscrimination requirements, including rules intended to prevent the program from disproportionately benefiting highly compensated employees.
Employer contributions count toward the Trump Account’s general $5,000 annual contribution limit during the growth period. Unlike ordinary after-tax contributions made by individuals, qualifying employer contributions do not create tax basis in the beneficiary’s Trump Account and therefore generally represent taxable amounts when ultimately distributed.
Source:nstp.org
