Starting July 2026, employers can make voluntary, tax-free contributions of up to $2,500 annually per employee to Section 530A Trump Accounts, which act as starter traditional IRAs for minors.
The new law, established by the One Big Beautiful Bill Act (OBBBA), evidences growing federal support for family wealth-building and financial well-being.
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Companies intending to set up benefit programs leveraging Section 530A of the IRC should be aware of the following key considerations and implications:
Tax Implications: Employee contributions are excludable from the employee’s gross income and not subject to payroll taxes. Employer contributions are deductible by the business as an employment benefit.
Contribution Caps: Employees can make pre-tax contributions up to $2,500 via an employer-sponsored Code Section 125 Cafeteria Plan. Direct employer contributions and employee salary reductions count toward this combined annual limit.
Seed Money. The federal government provides a one-time $1,000 seed contribution for eligible children born between 2025 and 2028. Employer contributions matching this federal seed money are considered part out of the overall $2,500 annual limit.
ERISA Exemption: The US Department of Labor issued guidance clarifying that Section 530A Accounts and their related contribution programs will generally not be subject to the Employee Retirement Income Security Act (ERISA) as long as certain conditions are met. Learn more here.
Compliance Rules: To take advantage of the tax exclusions, employer contributions must be processed through a formal Trump Account Contribution Program (TACP) that complies with non-discrimination, eligibility, and notification rules.
IRS guidance for setting up a compliant 530A contribution program is published here.
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If you have questions about Section 530A, ACA, PFML, or any other aspect of the complex benefits and compliance landscape, please contact BENEFITSCAPE by emailing info@benefitscape.com, calling +1 508-655-3307, or using the contact form at the bottom of this blog. We bring together deep, practical understanding of both employee benefits and data technologies plus game-changing benefits middleware.
