Everything you need to know about Trump Accounts.
Business owners are constantly on the hunt for better ways to reward employees.
Trouble is, most of the obvious choices are expensive. Raises cost money initially and increase payroll taxes, bonuses are taxable to the employee, employee perks get more expensive by the day.
That’s why Trump Accounts have us genuinely curious. And yeah, you’re either going to love that name or hate it, but as a business owner, you really should be paying attention for a different reason: Trump Accounts could become an incredibly tax-efficient way to invest in employees with young families.
So, what exactly is a Trump Account?
Think of it like an IRA for kids. Any U.S. citizen age 18 or younger with Social Security number is eligible. Children born between 2025 and 2028 are eligible for a one-time $1,000 deposit from the Treasury, and the account must be opened by a parent or guardian for that deposit to be received. Children born before 2025 can still have a Trump Account; they simply do not receive the $1,000 seed. After that, pretty much anyone — parents, family members, employers — can contribute additional funds over time, up to $5,000 annually. That $1,000 federal contribution does not count toward the annual limit. Investments are limited to low-cost index mutual funds or ETFs, with a 0.10% expense cap.
Amounts generally cannot be withdrawn before the child turns 18, at which point the account is generally treated as a traditional IRA.
At first glance, that all sounds like a family finance issue: baby gets its first IRA, parents and grandparents contribute over time, and the child has a nice nest egg waiting at 18.
It’s the employer piece that makes it relevant to your business.
Not your average employee perk.
Trump Accounts make it incredibly convenient for employees to invest in them. You can simply allow employees to contribute through payroll deductions.
But the tax benefits if you invest? This is where it gets interesting. The law allows employers to make contributions on behalf of eligible employees’ children, and in certain cases, those contributions may be excluded from the employee’s taxable income, up to the annual limit, when offered through a qualifying employer program.
That’s a huge improvement from handing someone a bonus check and a subsequent tax bill.
In other words, it isn’t just another employee perk. It’s also compensation strategy.
(Don’t hear us say to replace raises and all other employee benefits completely with contributions to Trump Accounts. Do hear us say they may earn a place alongside your current strategy.)
Imagine welcoming an employee’s new baby with a contribution toward their newborn’s future or offering an annual employer contribution for employees with children. For the right workforce, it’s a meaningful gesture.
The plot thickens.
Perhaps the most unusual thing we have ever seen is major foundations backing these accounts. The Michael & Susan Dell Foundation has pledged $6.25 billion to fund a $250 deposit for children born between 2016 and 2024 (those who do not qualify for the $1,000 federal contribution) as long as they live in a ZIP code where the median household income is $150,000 or less. That deposit will be processed by the Treasury on a quarterly cycle, so there may be a gap between when a family activates an account and when the funds actually appear. And with a cap of 25 million eligible accounts, families who qualify have a real incentive to act sooner rather than later. Dalio Philanthropies has announced matching contributions in Connecticut. Other organizations are committing millions more to expand access for children and families.
In our opinion, those commitments make it very unlikely the program will disappear soon.
Is it right for my business?
Don’t jump in blindly.
How employer contributions are structured, how payroll is administered, how the benefit fits with your existing compensation strategy, and whether it aligns with your workforce all deserve careful consideration. Trump Accounts won’t be right for every company, but they may offer a new way to support employees, strengthen financial wellness, and do it in a more tax-efficient way than traditional compensation.
Even if they don’t, they raise a bigger question:
How much of your compensation budget is going to your employees… and how much is going to taxes?
That’s a conversation we’d enjoy having with you.