NP Benefit Services

Put a child’s Trump Account on payroll.

The company can put money in. The employee can send pre-tax pay. Or you can do both. The vehicle is a Section 128 program, usually written into the Section 125 plan you already have.

General information from proposed federal rules employers may rely on now. Not tax, legal, or ERISA advice. A hearing on the employer rules is set for October 15, 2026.

Company money, employee money, or both.

This is an employer benefit, not a charitable donation. The dollars land in a child’s Trump Account. The parent or guardian names the account. You do not custody the money.

The company contributes

You fund the Trump Account of an employee’s child from company money. An employee with more than one child can split the dollars. The federal income-tax exclusion is still one number per employee, not one number per child.

The employee contributes pre-tax

Through the Section 125 plan, an employee elects a salary reduction into a dependent’s Trump Account. The tax code treats that election as an employer contribution. It counts toward the same $2,500. It cannot be pre-tax into the employee’s own account.

Source

Employer or paycheck

Document

Section 125 amendment

Destination

Child’s Trump Account

One cap. It is per employee.

$2,500

Maximum excluded from an employee’s federal income each year. Indexed after 2027. Every employer combined.

$5,000

The account’s annual contribution limit from all sources. Employer dollars count toward it.

FICA still applies

The exclusion is from federal income tax only. Social Security, Medicare, and federal unemployment tax still apply. It is not fully tax-free.

Pre-tax salary reduction is only for a dependent’s account. An employee’s own Trump Account, which is rare, cannot be funded pre-tax through the cafeteria plan.

Elections have to be changeable at least monthly, and only before that pay is currently available. Most payroll systems already do this for HSA contributions.

Contributions belong in the growth period: before the calendar year the child turns 18. At 18 the account becomes a traditional IRA.

A $1,000 federal pilot contribution is available for eligible children born in 2025 through 2028. An employer match offered on the same terms can use a nondiscrimination safe harbor.

The document, and someone to run it.

We already place group medical, dental, life, and ancillary coverage, with paperless open enrollment and year-round service. A Trump Account program is the next page in that book, not a product we custody.

The document

We amend the Section 125 cafeteria plan so it carries the Section 128 terms, or we set up a standalone written Trump Account contribution program. If the plan is not written, or you do not follow it, the income exclusion fails.

The administration

Payroll elections that an employee can change at least once a month, before that paycheck is locked. A cap so one employee does not send more than $2,500 across every child. A testing calendar so nondiscrimination is not a January surprise.

The explanation

A plain note for employees: company money, their own pre-tax money, or both. And the line people miss — pre-tax payroll can go to a dependent’s account, not to the employee’s own account.

Nondiscrimination is part of the setup

Section 128 borrows three tests from dependent-care rules. Eligible employees have to be offered the benefit on the same terms. The eligibility class has to be reasonable. The average contribution actually received by non-highly compensated employees has to be at least 55% of the average received by highly compensated employees. Only people who receive a contribution are counted. A salary-reduction program may disregard employees earning under $25,000. If the average-benefits test fails, the usual fix is to tax the excess to the highly compensated employees on the W-2, not to throw out the whole plan.

The Department of Labor’s Technical Release 2026-02 says these programs generally are not ERISA pension plans when the contribution is for a dependent during the growth period and the conditions in that release are met. That does not replace the written plan.