DOL: Trump Accounts Not Subject to ERISA Standards

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Quick Hits

• A new technical release from the DOL states that Trump Accounts for children are not “employee pension benefit plans” governed by ERISA.
• Employers and employees can contribute to Trump Accounts for children.
• Pilot program deposits of $1,000 each from the federal government will begin in July 2026.

Title I of ERISA defines mandatory standards for transparency, fiduciary conduct, vesting, and claims procedures for employer-sponsored retirement plans and health/welfare plans. These rules generally will not apply to the newly established Trump Accounts.

Overview of Trump Accounts

On July 4, 2025, President Donald Trump signed a federal budget reconciliation bill that included a provision to put $1,000 each in Trump Accounts for newborns who are U.S. citizens. For babies born between January 1, 2025, and December 31, 2028, the U.S. government will deposit $1,000 into a Trump Account, invested in a stock-market index fund. The federal deposits are expected to start in July 2026. Contributions can be made by employers, family, and other organizations.

When a Trump Account is opened, the eligible individual under age eighteen is the owner and beneficiary. The money can earn interest over time and be withdrawn any time after the child turns eighteen years old. An employer can contribute up to $2,500 per year to the Trump Account of an employee’s child, and the employer’s contribution will not count toward the employee’s taxable income. The growth period occurs from the date the account is established until January 1 of the calendar year in which the account beneficiary turns age eighteen.

During the growth period, five types of contributions can be made to a Trump Account: (1) a $1,000 pilot program contribution from the U.S. government; (2) qualified general contributions funded by the United States, a state government, the District of Columbia, an Indian tribal government, or a nonprofit organization for members of a qualified class of account beneficiaries; (3) employer contributions that are not includible in the gross income of the employee; (4) qualified rollover contributions; and (5) contributions from other sources, such as the account beneficiary, parents, or any other person.

Qualified general contributions and qualified rollover contributions are not subject to an annual contribution limit. All other contributions during the growth period are capped at $5,000 per year, subject to cost-of-living adjustments after 2027. Unlike contributions to traditional individual retirement accounts (IRAs), contributions may be made to a Trump Account during the growth period even if the account beneficiary does not have taxable income.

Trump Accounts may be invested in a mutual fund or exchange traded fund (ETF) that tracks an index of primarily U.S. companies, does not use leverage, and does not have annual fees and expenses of more than 0.1 percent of the balance of the investment in the fund.

During the growth period, no distributions may be made from a Trump Account, except for qualified rollover contributions, distributions of excess contributions, and distributions upon death of the account beneficiary. After the growth period, withdrawals will be subject to the same tax rules that apply to distributions from a traditional IRA, including regular income taxes and a 10 percent tax penalty on early distributions before age 59½, if there are no exceptions, such as for distributions for qualified higher education expenses or for first home purchases.

ERISA Status of Trump Accounts

The DOL noted in Technical Release 2026-02 that employer contributions to Trump Accounts generally would not be deemed ERISA-covered plans where the account benefits a dependent of an employee, as the accounts would not provide retirement income to an employee and therefore would not satisfy the ERISA definition of a “pension plan.” This ERISA exemption treatment applies whether the employer contributions are made directly or through a cafeteria plan using employee salary reduction contributions.

When a sixteen- or seventeen-year-old employee has not yet reached the end of the growth period, a Trump Account could benefit the employee. In this situation, employer contributions will not cause the account to be subject to ERISA, provided that participation is completely voluntary for employees, and the employer does not (1) impose conditions on utilization of Trump Account funds, (2) make or influence investment decisions, (3) represent that Trump Accounts are an employee benefit maintained by the employer, or (4) receive any payment in connection with a Trump Account.

Both during and after the growth period, an employer may allow an employee to contribute to their Trump Account via post-tax payroll deduction. The employer must continue to comply with the requirements outlined above for employer contributions. The DOL particularly stressed the importance of not endorsing the program and maintaining employer neutrality toward the program. The employer may publicize the program to employees, collect employee contributions, and remit them to the program sponsor. The employer may receive limited compensation from the program sponsor to offset its administrative costs in making employee contributions available.

Employers can offer a hyperlink to the official Trump Account website and place on the company intranet portal Trump Account information provided by IRA sponsors. Employers also can provide neutral information about using the payroll deduction to contribute to a Trump Account, as long as the employer doesn’t vouch for the quality of the specific financial product.

Ogletree Deakins’ Employee Benefits and Executive Compensation Practice Group will continue to monitor developments and will post updates on the Employee Benefits and Executive Compensation blog as additional information becomes available.

This article and more information on how the Trump administration’s actions impact employers can be found on Ogletree Deakins’ Administration Resource Hub.

Katrina M. Clingerman is a shareholder in Ogletree Deakins’ Indianapolis office.

David S. Rosner is a shareholder in Ogletree Deakins’ Washington, D.C., office.

This article was co-authored by Leah J. Shepherd, who is a writer in Ogletree Deakins’ Washington, D.C., office.

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