DOL Guidance Clarifies ERISA Status of Trump Accounts

The One Big Beautiful Bill Act (“OBBBA”), signed into law on July 4, 2025, established “Trump Accounts,” a new type of tax-favored savings arrangement under Section 530A of the Internal Revenue Code (the “Code”). Trump Accounts are a specialized form of traditional individual retirement account (“IRA”) established for the exclusive benefit of an individual under the age of 18 who has a valid Social Security number and for whom an election is made. During the period from account establishment through December 31 of the year before the beneficiary turns 18 (the “growth period”), distributions are generally prohibited and assets must be invested in certain low-cost mutual funds or ETFs that track a broad US stock market index, among other requirements. After the growth period (i.e., beginning January 1 of the calendar year in which the beneficiary attains age 18) most special Trump Account rules cease to apply, and traditional IRA rules generally apply.

Employer Contributions to Trump Accounts

Employers generally do not open Trump Accounts directly; accounts are established through the statutory election process by an authorized individual, while employers may contribute under a written Trump Account contribution program (“TACP”). Beginning July 4, 2026, an employer can make contributions of up to $2,500 per employee per year (not per dependent), excludable from the employee’s gross income, and which will count toward the aggregate annual contribution cap of $5,000. Contributions must be made under a TACP that meets Code requirements similar to those for dependent care assistance programs, including eligibility, nondiscrimination, and notification requirements. Employer contributions to the Trump Account of an employee’s dependent may be made via salary reduction under a Section 125 cafeteria plan. However, subject to further Treasury/IRS guidance, employer contributions to a Trump Account benefitting an employee directly may not be made through a salary reduction agreement under a Section 125 cafeteria plan, as such an arrangement would constitute a deferred compensation plan under Code Section 125(d)(2)(A). Note that guidance has not yet resolved how the $2,500 annual employer contribution limit applies where both parents’ employers, or multiple employers of the same parent, offer Trump Account contributions. Employers should consider obtaining employee certifications or other substantiation regarding eligibility for contributions. 

ERISA Status of Trump Accounts

On June 17, 2026, the Department of Labor issued Technical Release 2026-02, taking the position that Trump Accounts and TACPs will generally not constitute “employee pension benefit plans” under Section 3(2) of ERISA. Because ERISA’s definitions require that a pension plan provide retirement income to employees, the Department of Labor (“DOL”) explains that Trump Accounts and TACPs providing benefits for the dependents of employees fall outside of ERISA Section 3(2), even if funded by employer contributions under Code Section 128. For Trump Accounts that directly benefit employees (e.g., employees age 16 or 17), the DOL provides that ERISA will not apply if the employer satisfies certain conditions. These conditions include that: (1) participation is completely voluntary; (2) the employer does not influence investment decisions; (3) the employer does not impose conditions on the utilization of funds beyond those permitted under the Code; (4) the employer does not represent the accounts as an employee benefit plan; and (5) the employer generally does not receive consideration in connection with the program. Technical Release 2026-02 also permits employers to facilitate payroll deduction taxable contributions to an employee’s Trump Account during the growth period without triggering ERISA coverage, provided the employer satisfies the IRA payroll deduction safe harbor regulation at 29 C.F.R. § 2510.3-2(d). The DOL cautions that employers must avoid “endorsing” the program to remain within the safe harbor, but identifies several permissible activities, including providing general information on the IRA payroll deduction program and answering employee inquiries on the mechanics of the IRA payroll deduction.

Conclusion

Technical Release 2026-02 provides welcome clarity on the ERISA status of Trump Accounts and TACPs. However, technical releases are generally informal guidance, and in any event employers should not treat it as a blanket exemption. For example, Treasury and IRS proposed regulations reserved future guidance on contributions, investments, distributions, reporting, and other coordination with IRA rules. In particular, employers should note the distinction between accounts that benefit an employee’s dependents and accounts that directly benefit employees, which require satisfaction of specific conditions to avoid ERISA coverage. Employers considering a payroll deduction arrangement should also confirm compliance with safe harbor conditions. Given the evolving nature of guidance in this area, employers should consult with counsel to evaluate how Technical Release 2026-02 and other recent guidance affect existing and planned benefit programs.