For parents and guardians looking to set their children up for the future, “Trump Accounts” can be an excellent option. With high contribution limits, tax-deferred growth, and even government seed money available to eligible children, these accounts could be a great way to build long-term wealth.
For employers, though, there has been some confusion about whether these accounts may be subject to the strict requirements of the Employee Retirement Income Security Act (ERISA). Fortunately, the Department of Labor has recently offered answers to employers and parents/guardians alike.
The simple answer? Generally, Trump Accounts are not covered by ERISA. However, there are still some things that employers and Trump Account holders should know about these new, tax-advantaged savings accounts.
What Are Trump Accounts?
Trump Accounts were established under the One Big Beautiful Bill Act (OBBBA) in 2025. They are tax-advantaged investment accounts available to any United States citizen who is under the age of 18. Under these accounts, families, friends, and even employers can contribute up to $5,000 total per year—and that money grows tax-deferred. At age 18, the account automatically converts to a traditional IRA, making it a suitable option for families looking to build wealth for future generations.
As an added bonus, United States citizens born between 2025 and 2028 may also be eligible to receive seed money from the government in the form of a one-time, $1,000 contribution.
Are Trump Accounts Covered by ERISA?
One of the most common questions that Trump Account holders and employers alike have had about these accounts is whether the rules of ERISA apply to them. After all, because these accounts eventually convert to IRAs, it would make sense that they might be covered under ERISA.
However, the Department of Labor has clarified via Technical Release 2026-02 that Trump Accounts are typically not covered by ERISA because employers don't create or have control over the accounts themselves. Instead, these accounts are established by the United States Treasury—and accounts benefit employees' children rather than the employees themselves.
What This Means for Employers
Because Trump Accounts aren't subject to ERISA requirements, there are fewer compliance responsibilities for employers. However, some tax rules do still apply, so it's important to stay aware and plan accordingly.
Reduced Compliance Responsibilities
The good news for employers is that, because Trump Accounts aren't subject to ERISA, employers don't have to worry about the strict compliance requirements that they would otherwise need to follow with other types of retirement accounts. This includes filing annual Form 5500 reports, providing disclosures, and following specific ERISA claims procedures. This helps employers avoid additional administrative burdens.
Potential for Tax-Favored Contributions
Meanwhile, employers may also be able to make Trump Account contributions to employees work in their favor. That's because under Internal Revenue Code Section 128, employers are permitted to contribute up to $2,500 per employee each year to qualifying Trump Accounts. And because these contributions aren't included in an employee's taxable income, they can effectively reduce business tax burdens.
Some Tax Rules Do Apply
Even though ERISA rules don't apply to Trump Accounts and employers may be able to enjoy tax benefits from these accounts, some rules still may apply. For federal tax purposes, for example, Trump Accounts are still treated as IRAs. Because of this, employers are still required to comply with nondiscrimination requirements for employer contributions, as well as rules related to prohibited transactions.
The best thing employers can do now when it comes to handling Trump Accounts is to stay on top of the latest news and legislation surrounding these accounts and keep policies updated as needed. A little knowledge and proactive planning can go a long way in avoiding potential issues down the road while ensuring that any and all requirements are being met.
When in Doubt, Consult a Pro
Because Trump Accounts are still a new concept, it may take some time for employers to get accustomed to them. However, when the proper tax rules are followed, these accounts stand to be beneficial to employers who can make tax-favored contributions while helping their employees' dependents each year.
If you have questions about how Trump Accounts should be handled within your organization, contact our Employee Benefit Plan Audit team.