When Congress passes a bill with a title like the “One Beautiful Bill,” you can already guess who had their fingerprints on it. Out of this legislation comes the so-called Trump Account, a new hybrid savings vehicle that sits somewhere between a Section 529 Plan, a Roth IRA, and a cafeteria plan add-on. While many questions remain unanswered, employers should start familiarizing themselves with the basic framework.
How Do Trump Accounts Operate?
No contributions can be made before July 4, 2026, meaning employers and families have almost a year to evaluate whether they want to play in this sandbox.
Starting that date, contributions may be made annually until the child beneficiary reaches age 18. Contributions can come from parents, employers, extended family, or “others,” subject to an annual cap of $5,000 (unchanged through 2027).
Children born between December 31, 2024 and January 1, 2029 will automatically receive a $1,000 Federal contribution, unless parents opt out. In those cases, the IRS will open an account for the child unless one is already established.
Withdrawals are subject to restrictions—qualified education expenses, certain life events, and specific timing rules. In other words, think 529 Plan meets IRA rules: stray from the “qualified” use, and the IRS will hit you with penalties.
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