Entity Setup
Entity Setup Strategies in Light of New Trump Account Rules
New regulations on "Trump Accounts" and nondiscrimination rules change the game for employers and families when setting up retirement and educational savings vehicles.
By NomadicTax Research Team • 5-8 min read • September 6, 2026
## What Are Trump Accounts and Why They Matter
- **Trump Accounts** are new types of traditional IRAs under section 530A, established exclusively for eligible individuals (i.e. children under age 18 with valid SSNs), and they gain special tax treatment under the One, Big, Beautiful Bill Act (OBBBA). ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-eligible-investments-for-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
- Employer contributions to Trump Accounts can now be excluded from an employee’s gross income. ([irs.gov](https://www.irs.gov/pub/irs-irbs/irb26-37.pdf?utm_source=openai))
- Special rules apply during the “growth period” (from account opening until the year beneficiary turns 17), restricting investment types in many cases. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-eligible-investments-for-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
## Proposed Regulations & Nondiscrimination Rules
- Proposed regulations under **REG-101355-26** provide guidance on employer contributions for Trump Accounts and introduce **nondiscrimination rules** similar to those already in place for dependent care assistance programs. ([irs.gov](https://www.irs.gov/pub/irs-irbs/irb26-37.pdf?utm_source=openai))
- Eligible investments during growth period are limited to low-fee mutual funds or ETFs tracking primarily U.S. equity indices; fees must be ≤ 0.1%. After growth period, those restrictions lift. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-eligible-investments-for-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
## How This Impacts Entity and Employer Planning
### Employers Setting Up Trump Account Programs
- Must ensure **plan documents** include the nondiscrimination standards. A plan favoring higher-income employees could violate rules and lose favorable tax treatment.
- Must select eligible investments and communicate clearly to workers—if a beneficiary doesn't choose, trustee must default to an eligible fund. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-eligible-investments-for-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
### Families, Guardians, Parents
- Consider opening Trump Accounts early for children born 2025–2028 so they can qualify for the **$1,000 pilot contribution** during the opening period. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-eligible-investments-for-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
- Treat employer contributions as excluded from gross income—valuable as a tax planning tool for high-income households.
## Practical Example
**Scenario**: A company sets up a Trump Account program and wants to contribute $2,000/year for each eligible employee’s child during ages 5–16.
- For a child aged 10 (still within growth period), the employer must invest in eligible funds under proposed regulations (low fee, no leverage, U.S-equity index). If parent doesn’t select, trustee default applies. Otherwise, contributions are excluded under §128. If company design disproportionately benefits one group, may be tested under nondiscrimination provisions. After child turns 17, rules relax.
## Steps to Comply and Optimize
1. Review proposed regulations REG-101355-26 (comments due Sept 25, 2026), integrate nondiscrimination rules. ([irs.gov](https://www.irs.gov/pub/irs-irbs/irb26-37.pdf?utm_source=openai))
2. Choose a trustee that offers eligible low-fee index funds.
3. Open for children born Jan 1, 2025–Dec 31, 2028 to get pilot contribution eligibility. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-eligible-investments-for-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
4. Maintain documentation to prove eligibility of investments, beneficiaries, and nondiscrimination testing in case of an IRS audit.
## Actionable Checklist
| Task | Why It Matters |
|------|----------------|
| Draft plan documents with §128 Trump Account and §129 dependent care nondiscrimination rules | IRS review of compliance, prevents disqualifying favorable treatment |
| Choose eligible investments (index funds, low fees) early | Investors outside eligibility vs. default investment rules apply |
| Document SSNs, birth dates, valid beneficiary status | Critical for Trump Account validity, IRS filings |
| Train finance/HR to handle payroll exclusions appropriately | Avoid income inclusion mistakes |
Entity-level decisions around retirement and education savings are more promising with the recent Trump Account regulations—but compliance, choice of investment options, and nondiscrimination remain essential.