Tax Insight

Proposed regulations address employer contributions to Trump accounts and related nondiscrimination rules

Insight
5 minute read
August 21, 2026

What happened?

Treasury and the IRS on August 11 issued proposed regulations addressing employer contributions to “Trump accounts” under new Section 128 and nondiscrimination rules that apply to Trump account contribution (TAC) programs and Section 129 dependent care assistance (DCA) programs. The regulations are proposed to apply to plan years beginning on or after the date final regulations are published, but taxpayers may rely on the proposed regulations now..

Why is it relevant?

The proposed regulations establish the framework employers need to offer TAC programs, while also clarifying the complex nondiscrimination testing that applies to TAC programs and to DCA programs. Historically, DCA program nondiscrimination rules have been challenging for employers; the proposed regulations provide long-awaited guidance including correction mechanisms for certain failures.

Because taxpayers may rely on the proposed regulations now, employers can begin designing and implementing programs and procedures to address compliance immediately rather than waiting for final rules.

Actions to consider

Employers considering TAC programs should review the written plan requirements and assess whether they can administer the benefit operationally. This assessment includes aligning payroll, benefits, and trustee stakeholders plus evaluating cafeteria plans, recordkeeping, and Form W-2, Wage and Tax Statement, reporting systems so they can identify Section 128 contributions, apply the employee-level annual limit, validate Trump account eligibility, and provide corrective notices to trustees if an amount is later determined not to be a qualifying contribution.

Employers that maintain DCA programs should review existing nondiscrimination testing procedures.  

Taxpayers may submit comments by September 25, 2026, or participate in the public hearing scheduled for October 15, 2026.