DOL clarifies ERISA treatment of Trump Account contributions

The Department of Labor (DOL) issued Technical Release 2026-02 on June 17, 2026, clarifying how the Employee Retirement Income Security Act (ERISA) applies to Trump Accounts under IRC section 530A and section 128. 

Payroll impacts begin July 4, 2026, when employer and employee contributions may first be made, including through payroll deductions and, in limited cases, cafeteria plan salary reduction arrangements. 

Overview

Trump Accounts are tax-advantaged savings accounts for individuals under age 18. The growth period refers to the years before the calendar year in which the beneficiary turns 18. During this period, the account is subject to special rules governing contributions, investments and distributions. Once the growth period ends, the account is generally treated as a traditional IRA, and standard IRA rules apply.

ERISA status

The DOL states that Trump Accounts and section 128 employer contribution programs generally are not ERISA-covered pension plans, so ERISA Title I requirements, such as fiduciary and reporting rules, typically do not apply. Accounts for dependents generally fall outside ERISA because they do not provide retirement income to employees. In limited cases involving minor employees, ERISA coverage is generally avoided if participation is voluntary, the employer remains neutral, the employer does not control investment decisions and the employer receives no related compensation.

Contribution rules 

During the growth period, accounts may be funded from multiple sources, including employer contributions under section 128, government or tax-exempt entity contributions, rollovers, and contributions from parents or other individuals. Total annual contributions are limited to $5,000, with cost-of-living adjustments after 2027. Employer contributions are subject to a separate annual limit of $2,500 per employee, also indexed. 

Payroll considerations 

Employer contributions may be made to an employee’s Trump Account or to the account of the employee’s dependent and are excluded from the employee’s income. Salary reduction rules depend on whose account receives the contribution. Contributions to a dependent’s account may be offered through a section 125 cafeteria plan, while contributions to an employee’s own account cannot be made through a cafeteria plan. For ERISA purposes, amounts contributed through salary reduction are treated as employee contributions, even if they are treated as employer contributions under the Internal Revenue Code.

Employer neutrality 

The DOL emphasizes that employers must remain neutral. Employers may provide general information and process payroll deductions but should not endorse a provider or present Trump Accounts as an employer-sponsored benefit. 

Checkpoint observation 

The guidance confirms that Trump Account programs generally do not trigger ERISA pension plan status. Payroll teams must clearly distinguish between employer contributions and employee payroll deductions. 

Key takeaway 

Employer contributions generally do not create an ERISA-covered plan during the growth period. However, payroll implementation remains complex. Payroll teams must monitor and apply annual contribution limits, correctly distinguish between employer contributions and employee-funded payroll deductions, and apply salary reduction rules based on whether the contribution is made to an employee’s account or a dependent’s account. 

In addition, employers must maintain strict neutrality by avoiding endorsement of providers or presenting the arrangement as an employer-sponsored benefit. Clear coordination across payroll, plan design and employee communications is required to support compliance. 

Payroll Guide references:

• Payroll Guide ¶3001 – Federal tax withholding: Overview 
• Payroll Guide ¶3255 – IRAs and SEPs 
• Payroll Guide ¶3500 – Section 125 cafeteria plans – Plan design and options 
• Payroll Guide ¶3514 – Section 125 cafeteria plans – Federal tax treatment