New Trump Account employer contribution rules cap at $2,500

InvestmentNews first reported that the Treasury Department and IRS moved this week to propose regulations governing employer contributions to Trump Accounts, the federal retirement savings program.

The proposal would allow employers to contribute up to $2,500 per year, tax-free, to the Trump Account of an employee's child. It also clarifies nondiscrimination requirements: contribution programs must be set up as separate written plans for the exclusive benefit of employees, and cannot favor highly compensated employees or their dependents.

According to InvestmentNews, the guidance would also permit pretax payroll deductions by parents and could prompt more companies to offer matching contributions. IRS CEO Frank J. Bisignano said the proposals 'will provide a framework for businesses establishing a Trump Account contribution program.'

For retirement planning advisors, the proposed rules introduce a new workplace benefit to factor into family savings conversations. Advisors will need to understand eligibility and nondiscrimination rules before incorporating employer contributions into client plans.

The uncertainty cited by CFP Board's Erin Koeppel around the statutory 0.10% fee cap, and the need for more practical guidance for small businesses, are adoption hurdles ahead of the 2027 rollout.

The proposal is a step toward mainstreaming Trump Accounts as a retirement-savings feature. But the fee-cap ambiguity leaves the investment menu unsettled, and the Treasury's clarification that contributions will go to low-cost ETFs does not resolve whether the cap applies at the fund or account level.

CFP Board's push for more practical guidance suggests small employers are not yet ready to offer this benefit. The design also gives advisors 'two separate levers' — employer match and employee payroll contribution — to discuss with working parents.

Final rules and additional practical guidance for small employers are likely before the 2027 benefit year begins.