Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. Treasury Department and IRS have issued new guidance that would make it easier for parents and employers to put money into Trump Accounts for children. The Treasury announced the guidance Tuesday, outlining how employers could contribute to the accounts and allow employees to direct pretax dollars from their paychecks into accounts for their children.
The proposal is subject to public comment and a hearing in October before the rules can be finalized. Pretax money is taken from a paycheck before income taxes are calculated, which can reduce the amount of income subject to tax before the money goes into the account. Think Your 'Safe' Stocks Protect You?
You're Ignoring the Real Growth Triggers — Here's What to Add Now Caught With Nothing Saved for Retirement? These 5 Game‑Changing Tips Could Still Save You Trump Accounts, also known as 530A accounts, are tax-deferred investment accounts for children. Tax-deferred means taxes on the investment growth are generally postponed rather than paid immediately.
"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," Treasury Secretary Scott Bessent said. Parents, guardians, grandparents and others can contribute up to $5,000 a year to a Trump Account until the year before the beneficiary turns 18. Employer contributions are included within that limit, with employers able to contribute up to $2,500 per worker each year.
Children born from 2025 through 2028 can receive a one-time $1,000 Treasury contribution under the program. About 7 million children had been signed up, according to Bessent. Trending: Think you're saving enough for your kids?
You might be dangerously off — see why The Treasury guidance also allows employees to make pretax contributions through an employer cafeteria plan to their dependents' Trump Accounts. Employers that establish contribution programs must maintain a separate written plan, provide notices and annual statements, rely on employee certification of the beneficiary's age and dependent status and verify that the receiving account is a Trump Account, while also reporting contributions to the trustee. The Treasury said children who are not eligible for the initial $1,000 government contribution can still receive tax-free money through employer contributions.
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