The proposed regulations from the U.S. Treasury and IRS clarify how Trump Accounts, a new tax-deferred investment option for children, can be funded by both employers and employees. Employers may contribute up to $2,500 annually tax-free for each employee's dependent child, while employees can also contribute pre-tax dollars directly from their paychecks.
Treasury Secretary Scott Bessent emphasized that these accounts aim to help families build wealth from an early age. Currently, Trump Accounts are available to any U.S. child under 18 with a Social Security number, and a pilot program will provide a one-time $1,000 deposit for children born between 2025 and 2028.
As of now, over 50 companies have committed to contributing to these accounts, although a Mercer poll indicated that only 4% of employers expected to implement such programs in the near future. However, with the new guidance, interest from employers is anticipated to rise, as they gain a clearer understanding of the compliance framework.
Melissa Elbert from Aon noted that early adopters are likely to encourage more companies to consider participation