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July 13, 2026
World first published this article with some of the early guidance on Trump Accounts.
Employers May Be Able to Offer Contributions Without Triggering ERISA—But Compliance Responsibilities Remain
The One Big Beautiful Bill Act (OBBBA) included several enhancements allowing employers to offer additional tax-free benefits to their employees. Among these is a provision under Section 129 of the Internal Revenue Code (IRC) that permits employers to contribute up to $2,500 per year, on a tax-free basis, to Trump Accounts that an employer may establish for employees' dependents (and for employees themselves, if eligible based on age), provided certain requirements are met, including the maintenance of a written plan. As Trump Accounts prepare to launch on July 4th, 2026, a newly published Department of Labor (DOL) technical release answers a question many employers have been asking: if we contribute to these accounts, does ERISA apply?
The DOL recently released its answer to that question. In Technical Release 2026-02, the DOL concluded that Trump Accounts and related employer-sponsored Trump Account Contribution Programs generally do not constitute ERISA-covered pension plans (the guidance did not address welfare benefit plans, but by inference, it is safe to assume that the conclusion would be just as strong for that analysis) when structured within specific parameters.
For employers, this clarification removes a compliance conundrum. The guidance generally provides relief from ERISA reporting, disclosure, fiduciary, and plan administration requirements. However, IRC requirements and other administrative obligations still apply.
What Did the DOL Clarify?
The DOL concluded that Trump Accounts typically do not meet the definition of a retirement plan, because the accounts generally benefit an employee's child or dependent rather than the employees themselves.
As a result, employer contributions to Trump Accounts during the growth period generally would not create a pension plan and are, therefore, exempt from ERISA as long as participation is completely voluntary for employees, and the employer does not: (1) impose conditions on utilization of Trump Account funds beyond those permitted under the Code; (2) make or influence the investment decisions with respect to funds contributed to a Trump Account; (3) represent that the Trump Accounts or Trump Account Contribution Program are an employee pension benefit plan or an employee welfare benefit plan established or maintained by the employer; or (4) receive any payment or compensation in connection with a Trump Account.
The DOL also addressed situations involving minor employees (such as a 16- or 17-year-old employee) who may be the beneficiary of the account, which makes it look more like a retirement plan. The DOL fashioned an exception so that even in those situations, employer contributions generally will not trigger ERISA coverage during the account's growth period, provided the employer satisfies all of the conditions outlined by the DOL. The ERISA status of any particular arrangement will be fact-specific and dependent on satisfying all applicable conditions.
At A Glance
- DOL Technical Release 2026-02 (June 17, 2026) addresses whether Trump Accounts and employer-sponsored contribution programs are subject to ERISA.
- These arrangements generally are not ERISA-covered pension plans—provided the employer satisfies all conditions outlined by the DOL. Whether ERISA applies is fact-specific.
- ERISA relief does not eliminate all compliance obligations; tax code requirements under Section 128(c) remain in effect.
Employer Requirements to Preserve Non-ERISA Status
To preserve non-ERISA status, employers must avoid:
- Imposing restrictions on account use beyond those permitted by the Internal Revenue Code
- Directing or influencing investment decisions
- Representing the arrangement as an employer-sponsored retirement plan
- Representing the arrangement as an ERISA-covered welfare benefit plan
- Receiving compensation related to the accounts
The DOL's guidance consistently emphasizes that employers must maintain a limited administrative role and refrain from exercising discretion over account assets or investment decisions. For arrangements involving payroll deductions after the account has been established, employers should also be mindful of the IRA payroll-deduction safe harbor at 29 CFR § 2510.32-2(d). Whether and to what extent this safe harbor applies without modification to Trump Account payroll deductions has not yet been addressed in guidance specific to Trump Accounts, and employers should monitor future developments on this point.
The DOL Removed an ERISA Concern—Not the Full Compliance Burden
The DOL's recent Technical Release addresses an important ERISA question but is not intended to serve as comprehensive compliance guidance.
However, this conclusion does not eliminate the IRC requirements that may apply to employers sponsoring a Trump Account Contribution Program.
Employers evaluating these programs should recognize that tax compliance obligations still include written plan documentation, nondiscrimination requirements, payroll administration processes, employee communications, and ongoing oversight as additional IRS and Treasury guidance is issued.
The written-plan requirement is imposed by the Internal Revenue Code itself (IRC § 128(c)); the DOL Technical Release separately acknowledged this requirement, but the IRC is the source of the obligation.
"Not subject to ERISA" should not be interpreted to read as no compliance obligations apply.
Employers considering a Trump Account Contribution Program should work with legal, tax, payroll, and benefits advisors to determine what documentation and administrative procedures may be necessary to support the program.
When the Employee Is the Beneficiary: A Different Set of Rules
The distinction matters significantly in program design, because the two scenarios carry different rules and are not interchangeable:
| If the Beneficiary Is the Employee's Dependent | If the Beneficiary Is the Employee (Age 16 or 17) |
|---|---|
| Both funding routes are available: employer nonelective contribution and/or employee pre-tax salary reduction through a cafeteria plan. | Only the direct employer nonelective contribution is available. The cafeteria-plan salary reduction route is not available. |
| A salary reduction to a dependent's account does not raise deferred-compensation concerns under IRC § 125. |
A salary reduction to the employee's own account would likely constitute an impermissible deferral of compensation under IRC § 125(d)(2)(A), because the employee would acquire a vested right to compensation payable in a future year. This is the prevailing interpretation, though IRS has not yet issued guidance specifically addressing Trump Account salary reductions in this context. |
| Standard ERISA guardrails apply (voluntary participation, no investment direction, etc.). | The same guardrails apply, but the DOL treats this as the higher-scrutiny scenario—it most closely resembles a retirement plan. |
In short: if the contribution is going to an employee's dependent's account, both funding mechanisms are available. If it is going to a minor employee's own account, only the direct employer contribution works under the current prevailing interpretation—and the ERISA guardrails deserve extra attention.
Looking Ahead
The action items above reflect what employers can act on now. Beyond that, the Department of Labor has clarified the ERISA status of Trump Accounts and related employer contribution programs, but additional guidance from the IRS and Treasury Department is still expected—including final rules on the nondiscrimination testing methodology, cafeteria plan coordination, contribution aggregation, and the broader § 530A regulatory framework (contributions, investments, distributions and reporting). Sections 1.530A-2 through 1.530A-6 of the proposed regulations have been expressly reserved for this future guidance.
Employers considering implementation should continue to monitor future guidance and consult with legal, tax, payroll, and benefits advisors before establishing a Trump Account Contribution Program.
Additional information may be found at: https://trumpaccounts.gov/
This publication is intended for informational purposes only and reflects guidance available as of June 2026. It is not tax or legal advice. Trump Accounts are a newly established savings vehicle, and significant additional guidance from the IRS and Treasury Department is anticipated. Future regulations and guidance may materially affect the rules summarized here. Employers should consult with qualified legal, tax, payroll, and benefits advisors before implementing a Trump Account Contribution Program.
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