The IRS issued initial guidance regarding how Trump accounts work.  As a reminder, Trump accounts, created under the One Big Beautiful Bill Act ("OBBA"), are a type of individual retirement account ("IRA") for children, to which parents, grandparents, etc. can make up to $5,000 (indexed) annual contributions.   

Notice 2025-68 provides the first round of helpful guidance for IRA providers interested in maintaining these accounts, and employers interested in funding these accounts for their employees.  The Notice goes into detail regarding various topics – including (1) how to establish an account, (2) how to elect the $1,000 government contribution for certain newborns, (3) the types of permissible investments, (4) the types of contributions that can be made (including employer contributions), (5) the restrictions on distributions, (6) various new tax reporting requirements related to the accounts, and (7) coordination with various IRA rules.  

Most notable is the confirmation that parents can make pre-tax salary deductions (up to $2,500, indexed) through a cafeteria plan to contribute to their child's Trump account.  Of course, employers can also simply elect to contribute up to $2,500 (indexed) tax-free to the Trump accounts of their employees under age 18 or to the accounts of their employees' dependents under age 18.  (The $2,500 annual limit is per employee (not per child)).

Stay tuned for more information on Trump accounts, which are set to be available next July!

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