Treasury Corrects Proposed Trump Account Tax Rule

Treasury and the Internal Revenue Service published a technical correction on August 24, 2026, to a proposed rule that could affect employer contributions to Trump Accounts and the administration of dependent-care assistance programs.

The correction applies to proposed rule document 2026-16314, published August 11. It changes the printed hearing-date language to September 25, corrects an image, and fixes the regulatory heading identifying the Trump Account contribution program. The correction is narrow: it does not finalize the proposed tax treatment or require employers to offer the benefit.

What the proposal would allow

If finalized, the proposal would allow a qualifying employer to contribute up to $2,500 per employee per year to the Trump Account of the employee or an eligible dependent without including the contribution in the employee’s gross income.

The $2,500 limit would be an aggregate limit per employee, not a separate limit for each dependent. The proposed rule would provide for inflation adjustments after 2027.

A qualifying Trump Account contribution program generally would have to be established as a separate written employer plan. The plan would need to identify eligible employee classes, set contribution rules, describe account-designation procedures and provide for required certifications, notices, reporting and correction procedures.

The proposal also would require employers to use a reasonable method to verify that contributions are sent to valid Trump Accounts and to identify qualifying contributions to trustees. A salary-reduction arrangement under a Section 125 cafeteria plan would be proposed only for contributions to a dependent’s Trump Account, not the employee’s own account.

Why employers may need to prepare

For employers considering the program, the proposal raises operational questions beyond the contribution amount. Payroll systems may need to identify qualifying contributions and apply the employee-level annual limit. Benefits teams would need to review plan documents, employee communications, account-verification procedures, trustee coordination and reporting, including possible Form W-2 reporting.

Employers also would need to assess whether eligibility rules and contribution practices comply with the proposed nondiscrimination standards. PwC‘s specialist analysis identified potential administrative work involving plan design, payroll, trustees, recordkeeping and reporting if the regulations move forward.

The proposed rule also addresses nondiscrimination rules for dependent-care assistance programs. It would clarify how eligibility, contributions and average benefits are evaluated for highly compensated employees and other employees. If a plan failed certain tests, the proposed rules would generally deny the tax exclusion to highly compensated employees while preserving it for non-highly compensated employees, subject to proposed correction mechanisms.

Those provisions concern plan administration and tax-exclusion treatment. They would not create a universal new child-care benefit.

What employees and families should know

The proposal does not change current tax treatment simply because it was published. Employees should not treat employer-funded Trump Account contributions as a generally available tax exclusion until final guidance applies.

Families interested in the potential benefit can ask whether their employer is considering a contribution program and how eligibility would be determined. Employers are not universally required to participate, and any eventual benefit would depend on the final rule and the employer’s plan design.

The proposed regulations state that they would apply to plan years beginning on or after the date a final rule is published in the Federal Register. Treasury and the IRS have not yet issued final regulations for this proposal.

Deadlines and the hearing

Comments and requests to speak at the public hearing must be received by September 25, 2026, according to the August 11 proposed rule and the August 24 correction. The hearing is scheduled for October 15, 2026, at 10 a.m. Eastern time, unless it is canceled because no requests to speak or outlines are received by September 25.

The proposed rule separately says that requests to attend the hearing must be received by 5 p.m. Eastern time on October 13. The IRS announcement issued August 11 also refers to October 13 as the deadline for requests to speak, creating a conflict with the Federal Register proposal and correction. Organizations planning to participate should rely on the corrected Federal Register record and verify the filing instructions before submitting materials.

The next major step will be Treasury and IRS review of public comments. Any final regulations would determine whether the proposed exclusion takes effect, when it applies and what final compliance requirements employers, payroll providers and account trustees must follow.

Sources

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