Trump Account Employer Contributions: How Do You Set Up a Section 128 Program?

Section 128 of the Internal Revenue Code lets an employer contribute to the Trump account of an employee or an employee's dependent, with the amount excluded from the employee's gross income, but only when the contribution is made under a "Trump account contribution program": a separate written plan of the employer for the exclusive benefit of its employees.^[1] That written-plan requirement is the starting point for any business owner considering this benefit.

The legal window opened on July 4, 2026: contributions to Trump accounts could not be made before that date, and the first funding season is now underway.^[2] Operationally, the rollout is still catching up. The official Trump Accounts platform currently states that employers may contribute "through an employer contribution process, when available"; family contributions are live, but dedicated employer payroll remittance may not yet be open to every business.^[3] Before announcing a contribution start date, confirm current remittance capabilities with your payroll or benefits provider. This article covers the employer side: program setup and plan administration. The household-level rules on contributions and taxation are covered in our overview of Trump account contributions and strategy.

What Is a Section 128 Trump Account Contribution Program?

A Trump account contribution program is a separate written plan of an employer, for the exclusive benefit of its employees, that provides contributions to the Trump accounts of those employees or their dependents.^[1] Requirements similar to those that apply to a section 129 dependent care assistance program, regarding discrimination, eligibility, notification, statements, and benefits, apply to a Trump account contribution program; those design duties are covered in detail below.^[1]

The account on the receiving end is a Trump account: a type of traditional IRA established for a child who has not turned 18 before the end of the year of the election, subject to special rules during its "growth period."^[2] Every Trump account must have a trustee that is either a bank or another person approved by the IRS as a nonbank trustee of a Trump account.^[2]

For 2026, up to $2,500 of section 128 employer contributions per employee may be excluded from that employee's gross income, with cost-of-living adjustments after 2027.^[1] The limit applies per employee, not per dependent. In the example given in Notice 2025-68, if an employee has two or more children with Trump accounts, the employer may contribute only up to $2,500 in the aggregate for 2026 across those accounts.^[1]

Why Might a Business Owner Offer One?

The appeal is a benefit that funds long-horizon savings for employees' families. Contributions made during the growth period are not includible in the account beneficiary's income when made, and section 128 employer contributions do not create basis in the account.^[2] The accounts also keep investing simple: during the growth period, a Trump account may hold only "eligible investments," generally index mutual funds or ETFs that track an index of primarily U.S. companies and have annual fees and expenses of no more than 0.1 percent.^[1] At launch, Treasury set a low-cost S&P 500 index ETF as the default investment for all Trump accounts.^[4] These are equity funds; account values will fluctuate and are not guaranteed.

What do you take on in exchange? Administration. The program requires a written plan document, dependent-care-style eligibility and nondiscrimination requirements, payroll and W-2 reporting, contribution tracking against two separate limits, and a regulatory framework that is still partly in the proposal stage.^[5] Business owners weighing this benefit against other family-savings tools can start with our Trump account vs. 529 plan comparison.

How Do You Set Up the Program?

1. Adopt a separate written plan. Section 128(c) requires a separate written plan of the employer for the exclusive benefit of its employees; contributions made outside such a program do not qualify for the exclusion.^[1] This is a legal document, so it belongs with qualified benefits counsel. The design requirements the plan must satisfy are covered in the next section.
2. Decide whose accounts receive contributions. Contributions may go to the employee's own Trump account, a dependent's, or both. The destination matters if you want to use salary reduction: under IRS Notice 2025-68, a Trump account contribution program may be offered via salary reduction under a section 125 cafeteria plan if the contribution goes to the Trump account of the employee's dependent, but not if it goes to the employee's own Trump account, because that would provide deferred compensation under section 125(d)(2)(A).^[1]
3. Confirm the accounts exist and are activated. An employer cannot contribute to an account that has not been established. A parent or other authorized individual makes the election on Form 4547, through the Trump Accounts app or website, or through the IRS, and the individual who elects becomes the responsible party for the account.^[2] Filing the election alone does not finish the job: the account must be activated and able to accept contributions before it can receive employer money, a sequence covered in our guide to opening a Trump account.^[3] On the employer side, expect an onboarding step where employees supply the account identifiers your payroll or remittance process requires.
4. Size contributions within both limits. Beyond the $2,500 per-employee exclusion for 2026, each Trump account has its own growth-period limit: section 128 employer contributions plus contributions from other sources are subject to a $5,000 annual aggregate limit, while pilot program contributions, qualified general contributions, and qualified rollover contributions are exempt from that limit.^[2]
5. Configure payroll and W-2 reporting. Section 128 employer contributions must be reported on the employee's Form W-2 in Box 12 using code TA.^[6] Confirm that your payroll system can track three categories separately: section 128 employer contributions, salary-reduction amounts under a cafeteria plan, and any post-tax payroll contributions employees make on their own. They are not interchangeable; post-tax employee contributions, for example, are treated as contributions from other sources and create basis in the account, while section 128 contributions do not.^[7]
6. Build the remittance and labeling process. How contributions are identified to the trustee is an ongoing duty, covered next.

What Plan-Design Requirements Apply?

Section 128(c) does more than call for a document. It cross-references the dependent care assistance program rules, requiring a Trump account contribution program to meet requirements similar to those of paragraphs (2), (3), (6), (7), and (8) of section 129(d): nondiscrimination in contributions and benefits, a nondiscriminatory eligibility classification, reasonable notification of eligible employees, a written annual statement of benefits, and an average-benefits test under which benefits provided to non-highly compensated employees must average at least 55 percent of those provided to highly compensated employees.^[8] Because the statute requires "similar" rules rather than importing section 129 wholesale, the precise mechanics await further guidance.^[1] In practice, each requirement has a working translation today:

What Does Ongoing Administration Involve?

Labeling is the core duty. Under Notice 2025-68, which describes rules Treasury and the IRS intend to propose as regulations, an employer making a contribution under a Trump account contribution program must affirmatively indicate to the trustee that it is a section 128 employer contribution excludible from the employee's gross income; the trustee may rely on that indication unless it has knowledge to the contrary.^[1] Why does the label matter so much? Trustees report the amount and source of contributions by category, so mislabeled contributions create reporting problems downstream.^[1]

Timing is strict. For taxable years ending during the growth period, a contribution counts for the year in which it is made; per the intended rules in Notice 2025-68, a contribution made on January 31, 2027, is for 2027 and cannot be applied to 2026.^[1]

Coordination with families matters, too. Trustees must have procedures to prevent a contribution from pushing aggregate non-exempt contributions over the account-level limit, which can mean returning the excess to the contributor.^[1] Ask employees whether household contributions already fill part of the $5,000 room; that step seeks to avoid returned employer contributions and payroll rework.

Common Mistakes to Avoid

Treating it like a retirement plan contribution. A Trump account can never receive contributions under a section 408(k) SEP arrangement or a section 408(p) SIMPLE IRA plan; the section 128 program is its own benefit with its own rules.^[1]

Multiplying the limit by dependents. The $2,500 exclusion limit for 2026 applies per employee in the aggregate, no matter how many of that employee's dependents have accounts.^[1]

Ignoring family contributions. Employer contributions and family contributions share the same $5,000 annual account-level limit during the growth period.^[2]

Running employee-own-account contributions through salary reduction. As noted above, the cafeteria plan route is available for contributions to a dependent's account, not the employee's own account, under the intended rules.^[1]

What Is Still Unsettled?

The rulebook is not finished. Notice 2025-68 states that Treasury and the IRS intend to propose regulations consistent with its question-and-answer guidance, including the employer identification rule and the cafeteria plan coordination rules.^[1] Proposed regulations published in March 2026 addressed the election to open a Trump account and reserved additional sections for further guidance; the comment period closed on May 8, 2026.^[5]

On the benefits-law side, the Department of Labor has answered the principal ERISA question. Technical Release 2026-02, issued June 17, 2026, concludes that Trump accounts and section 128 contribution programs generally will not constitute employee pension benefit plans under Title I of ERISA.^[7] For programs contributing to the accounts of employees' dependents, the reasoning is direct: the benefit runs to the dependent rather than to the employee. When the account beneficiary is also an employee, such as a 16- or 17-year-old worker, the release conditions non-ERISA treatment on completely voluntary participation and limited employer involvement: no conditions on the use of account funds beyond those the Code imposes, no making or influencing investment decisions, no representing the program as an ERISA plan, and no payment or compensation to the employer in connection with the account.^[7] Program design decisions still deserve review by qualified benefits and tax professionals. Caldric does not provide tax or legal advice; we treat these questions as education and coordination with those professionals.

Risks and Limitations

Employer contributions are locked into a restrictive account. During the growth period, distributions are generally prohibited, with narrow exceptions such as rollovers, returns of excess contributions, and distributions upon the death of the account beneficiary; after the growth period, traditional IRA rules generally apply, including the 10 percent additional tax on early distributions unless an exception applies.^[2] The full distribution rules, including what changes at age 18, are covered in our guide to Trump account withdrawal rules.

Employer contributions also consume part of the $5,000 annual room that families could otherwise use themselves, so a generous program can crowd out household contributions in a given year.^[2] Account investments are limited to eligible equity index funds during the growth period, so balances will move with the stock market; growth is not guaranteed.^[1] For how we approach investment risk and process questions generally, see our methodology. Finally, because key guidance remains proposed rather than final, program terms may need amendment as regulations are completed.^[5]

The Bottom Line

A section 128 program requires more than a written document and a contribution limit. Employers must coordinate plan eligibility and nondiscrimination design, employee notices and annual statements, payroll and W-2 reporting, account activation, the interacting $2,500 and $5,000 limits, contribution labeling to the trustee, and the Department of Labor's ERISA conditions. Errors can cause contributions to be rejected or returned, jeopardize the employee's income exclusion, and force payroll or reporting corrections; an uncorrected excess contribution can also have separate tax consequences for the account beneficiary.^[1] Program design and administration belong with benefits counsel, a tax professional, and your payroll provider; Caldric's role is helping clients evaluate how the resulting savings fit within their broader financial plan. Questions about which approach fits your business and your family's goals? Start a conversation.