Employer contributions made to a minor child's Trump Account generally will not be subject to Title I of the Employee Retirement Income Security Act, according to newly issued guidance from the U.S. Department of Labor. Title I is intended to protect employees, beneficiaries and the public interest by ensuring transparency, financial soundness and equitable treatment.
A technical release from the department's Employee Benefits Security Administration provides guidance regarding the treatment of Trump Accounts, given their status as an individual retirement account that may be funded by contributions from employers, governments, charitable organizations and family members.
"This guidance should provide the clarity that employers need as the administration rolls out Trump Accounts to jumpstart a golden age of investing in future generations," said Keith E. Sonderling, acting secretary of labor. "Through President Trump's leadership, Trump Accounts are a strong first step toward a secure financial future."
These accounts will contribute to long-term financial security for millions of U.S. citizens under 18 through tax-advantaged investments, the department said. Children born between Jan. 1, 2025, and Dec. 31, 2028, are eligible to receive a $1,000 contribution to their account from the Treasury Department. Families also can contribute up to $5,000 a year to each account. In addition, state, local and tribal governments, as well as charities and employers, can contribute to a child's Trump Account.
According to the National Association of Plan Advisors, a Trump Account is subject to certain special rules inapplicable to other individual retirement arrangements under IRC Section 408. Most of these rules apply only during the period that ends before January 1 of the calendar year in which the account beneficiary reaches age 18. The special rules that apply only during this growth period include:
- Funds in a Trump Account can be invested only in eligible investments
- A Trump Account has a separate contribution limit from other individual retirement arrangements
- A Trump Account generally is not allowed to make distributions
- No deduction by an individual is allowed under IRC Section 219 for any contribution to a Trump Account
- Trustees of Trump Accounts have similar but different reporting requirements
After the growth period, most of these special rules cease to apply, and the rules under Section 408 governing traditional IRAs generally apply, according to the Labor Department. The scheduled launch date for Trump accounts is July 4.
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