The Department of Labor issued new guidance Wednesday concluding that most employer contributions to the new Trump Accounts created under last year’s tax and spending law will not, by themselves, subject employers to the federal pension law that governs workplace retirement plans.
The technical release addresses a question raised by businesses and benefits professionals ahead of the Department of the Treasury’s planned July 4 rollout of the children’s investment accounts. According to the guidance, Trump Accounts, also called 530A accounts after the Internal Revenue Code section that governs them, and employer contribution arrangements to them generally will not be considered employee pension benefit plans under the Employee Retirement Income Security Act, provided that employers maintain a limited role and meet specific conditions.
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The clarification removes a potential compliance concern for employers weighing whether to offer contributions to the accounts as a workplace benefit, particularly for employees’ children. While the accounts are structured as a specialized form of traditional individual retirement account, they operate under a unique set of rules during a beneficiary’s first 18 years, including restrictions on investments, withdrawals and contributions.
According to the DOL, Congress authorized tax-favored employer contributions to Trump Accounts in the 2025 budget reconciliation law but did not expressly state whether those arrangements would fall under ERISA. After reviewing the statute, the department concluded that accounts established for employees’ dependents generally do not meet ERISA’s definition of an employee pension plan because the retirement benefit belongs to the child, rather than the worker.
The guidance also addresses the less common situation in which an employee younger than age 18 is the account beneficiary. In those cases, the department stated that ERISA coverage still generally can be avoided if employers refrain from controlling the accounts or investments; do not impose restrictions beyond those required by law; do not market the accounts as employer-sponsored retirement plans; and receive no compensation related to the accounts.
Additionally, the Depository Trust and Clearing Corporation recently announced that it is making technical updates to its account transfer system to support Trump Accounts, including introducing standardized account identifiers and a new account type code so these accounts can be transferred between financial institutions. It has also begun testing these changes ahead of the accounts’ launch to ensure firms can process them consistently and at scale, which began on June 5, according to a notice published on its website.
Trump Accounts were established in the One Big Beautiful Bill Act as long-term savings vehicles for children younger than 18. Beginning July 4, authorized adults will be able to contribute to accounts for eligible children, with annual contributions generally capped at $5,000 per year during the account’s growth period, while the beneficiary is under age 18. The law also created a pilot program featuring a one-time, $1,000 federal contribution for eligible children born from 2025 through 2028 once an account is established and the required election is made. Employer contributions of up to $2,500 per year are also permitted under separate tax rules, although total nonfederal contributions may not exceed $5,000 per year.
During the growth period, account assets must be invested in low-cost diversified U.S. stock index funds, and withdrawals generally are prohibited until the beneficiary reaches adulthood, with limited exceptions. After the growth period ends, the accounts largely transition to being governed by the same rules governing traditional IRAs, including taxation of certain withdrawals and eligibility for existing IRA withdrawal exceptions.
The new guidance did not address other ongoing concerns raised in industry comments, such as whether the Treasury might allow investment in international equities or other asset classes.
