Trump Accounts open for 60 million more children; for employers, the $2,500 limit is per worker, not per child

Every eligible American child under 18 with a Social Security number now has a Trump Account, the Treasury Department said on Thursday, after it completed automatic enrollment. Treasury Secretary Scott Bessent said more than 60 million additional children now have an account ready to be claimed. Before auto-enrollment, about 7 million to 8 million children had been signed up, Bessent told a House committee in mid-September, CNBC reported.

An open account is not a funded one. A parent or guardian still has to claim it through the Trump Accounts app, verifying identity and relationship to the child. Only a claimed account can take contributions from family, friends and employers, and only claiming unlocks the one-time $1,000 Treasury deposit for children born from 2025 through 2028. Treasury will also allow donations of individual stocks, which generally must be held for five years, CNBC reported.

Why this matters to an employer

Auto-enrollment turns a niche benefit into one that applies to nearly every worker with a child. Employers can contribute under section 128 of the tax code, and Treasury and the IRS set out how in proposed regulations published Aug. 11. The comment period closed Sept. 25, so these rules are not yet final. The main points:

• $2,500 a year, per employee. The exclusion is capped at $2,500 for 2026 and 2027, indexed after that. It applies per worker, not per child: an employee with three kids still has one $2,500 limit.
• A separate written plan. Contributions only qualify under a written Trump account contribution program that names the eligible classes of employees, with reasonable notice to all eligible staff.
• No favoring the highest earners. The plan must pass nondiscrimination tests similar to those for dependent care benefits.
• Payroll tax still applies. The proposed rules say the contributions are excluded from income tax but are still wages for Social Security, Medicare and federal unemployment tax.
• Owners are mostly out. Sole proprietors, partners and more-than-2% shareholders of an S corporation are not employees for this purpose, so they cannot route the benefit to their own children through the plan.

What $2,500 is worth, worked through

Take one employee in the 12% federal income tax bracket. Payroll tax is 7.65% on each side.

The difference is the $300 of income tax, before any state tax. In the 22% bracket it would be $550. The cost to the employer is identical, $2,691.25 either way. The trade-off for the worker is liquidity: the bonus is cash today, while the contribution is locked in a child's account.

What to do now

For most small employers, nothing yet. The rules are still proposed, the money only reaches claimed accounts, and setting up a written plan with nondiscrimination testing is real administrative work for a business without an HR department. A firm that already runs a dependent care assistance plan has the closest template, since the proposed tests mirror those rules. Owners of S corporations and partnerships should note the plan cannot benefit their own families. Employees who want the $1,000 seed deposit for a child born from 2025 on should claim the account now; that part requires no employer at all.

Sources: U.S. Treasury; CNBC; Treasury/IRS proposed regulations, Federal Register. Tax figures are Chronicle calculations for illustration, using federal rates only. This is general information, not tax advice.