New federal guidelines are opening the door for working parents to reduce their taxable income while building long-term wealth for their children through Trump Accounts.
The Treasury Department and IRS have proposed rules allowing employers to contribute up to $2,500 annually to Trump Accounts belonging to employees or their dependent children, tax-free.
Employees would also be permitted to direct pre-tax dollars from their paychecks into Trump Accounts held by their dependents, providing a new vehicle for family savings.
Trump Accounts, also known as 530A accounts, were created under President Trump’s One Big Beautiful Bill Act and are tax-deferred investment accounts for Americans under age 18 with a Social Security number.
Treasury Secretary Scott Bessent said the accounts “are giving American families a new way to build wealth from day one” and praised the new employer contribution guidance.
“Today, Treasury is publishing guidance that will help families grow Trump Accounts by allowing employers to contribute up to $2,500 tax-free each year for employees’ dependents and giving employees the option to contribute pre-tax dollars directly to those accounts,” Bessent said.
Parents, guardians, grandparents, and others can contribute up to $5,000 per year to an account until the year before the beneficiary turns 18, with employer contributions counting toward that overall limit.
Contribution limits are scheduled to begin adjusting for inflation after 2027, according to the proposed guidelines, though the tax treatment of future withdrawals remains unresolved.
Eligible U.S. citizen children born between January 1, 2025, and December 31, 2028, can receive a one-time $1,000 federal government contribution after an election is made to establish their Trump Account.
The White House Council of Economic Advisers estimates account balances could reach a minimum of $5,800 with no additional contributions, or a maximum of $303,800 by age 18 if maximum contributions are made, assuming average stock market returns.
More than 50 companies have committed to making contributions on behalf of their employees, including Chime, State Street, Vanguard (VANGD), and Visa (V), according to the Treasury Department.
Melissa Elbert, a partner of wealth solutions at Aon, a retirement benefits consultant for employers, said companies now have a much better understanding of the administrative and compliance framework.
Economist Darrick Hamilton, a professor at the New School for Social Research in New York, argued the accounts will primarily benefit those who already have financial resources available to save.
The accounts further “a tax structure that already privileges people and families with existing wealth and resources rather than promoting greater access to the benefits and privileges of wealth,” Hamilton added.
Trump Accounts can be used for education or retirement, though 529 plans continue to offer stronger advantages specifically for college savings, including state income tax deductions and fully tax-free withdrawals for qualified education expenses.
The proposed regulations are subject to a public hearing on October 15, 2026, before they are formally finalized.
