Treasury and IRS Propose Framework for Employer Trump Account Contribution Programs (TACPs)

The IRS has released proposed regulations for employer-sponsored Trump Account Contribution Programs (TACPs), offering a framework for employers to establish these new benefit plans. These rules, drawing from existing dependent care assistance program guidelines, outline operational requirements, contribution limits, and nondiscrimination testing.

Employers will need to implement written plans and verify eligible Trump Accounts, with annual income exclusions capped at $2,500 per employee. Pre-tax salary reductions are permitted only for dependent accounts, and contributions remain subject to FICA and FUTA taxes.

The proposed regulations introduce nondiscrimination tests focusing on contributions, eligibility, and average benefits, mirroring Section 129 principles. Employers should review these proposals to understand operational impacts, including potential Section 125 cafeteria plan amendments and the need for robust administrative systems.