Labor Department Clarifies Trump Account Link to Employee Pension Plan

Contributions made to an employee’s Trump Account will generally not be subject to federal pension plan regulations, the Department of Labor (DOL) said in a June 18 statement.

The DOL’s recent clarification concerns whether an employer’s contributions to an employee’s Trump Account are subject to Title I of the Employee Retirement Income Security Act (ERISA).

ERISA is a federal law that governs the standards for most private-sector retirement and benefit plans, including pension plans. Title I of ERISA institutes reporting, disclosure, funding, and other regulations.

In a June 17 statement, the DOL said section 3(2) of ERISA makes it clear that a plan will only be considered a pension plan under the section “if it provides retirement income to employees.”

“Trump accounts, by contrast, generally provide benefits (tax-advantaged savings) for dependents of employees—and not to the employees themselves,” the statement reads.

“For this reason, we are of the view that such accounts and Trump account contribution programs that contribute to these accounts generally would not constitute ‘pension plans’ within the meaning of section 3(2) of ERISA,” even if the accounts are wholly or partially funded by employer contributions in line with Section 128 of the Internal Revenue Code.

In certain limited cases, Trump Account beneficiaries may be employees younger than 18. ERISA regulations won’t apply if the employee’s participation is voluntary and the employer meets four conditions.

One, the employer cannot impose requirements on the utilization of Trump Account funds beyond certain limits. Secondly, they cannot make or influence investment decisions regarding funds in the Trump Accounts.

Third, the employer cannot claim that the Trump Accounts or contributions made to them are part of an employee’s pension or welfare plan established by the company. Finally, they cannot receive any compensation or payment related to a Trump Account.

The Trump Accounts, formally known as Invest America accounts, were set up under the One Big Beautiful Bill Act, signed into law last year by President Donald Trump. Any child younger than 18 who is a U.S. citizen with a valid Social Security Number can open a Trump Account.

The accounts can receive up to $5,000 in annual contributions from various sources, such as the child’s parents, governments, and parents’ employers. An employer can contribute up to $2,500 yearly.

Acting Labor Secretary Keith E. Sonderling said that the latest guidance from the DOL “should provide the clarity that employers need as the Administration rolls out Trump Accounts to jumpstart a golden age of investing in future generations.” Contributions can be made beginning July 4.

The employer contribution of up to $2,500 per year to Trump accounts will be counted toward the $5,000 annual contribution limit accepted for such accounts.

On March 31, the IRS stated that U.S. taxpayers had enrolled more than 4 million children in the Trump accounts.

Trump Accounts Impact

There are concerns that Trump accounts could exacerbate wealth inequality, especially through employer contributions, according to Brendon McDermott, an analyst in public finance at the Congressional Research Service.

“Employer contributions could increase inequities, to the extent that higher-earning parents/guardians or Trump Account beneficiaries may have greater access to employer contributions than other workers,” McDermott said.

“In 2025, 83 percent of workers in the highest-earning 10 percent had access to an employer-sponsored retirement plan, compared to 36 percent of the lowest-earning tenth of workers.”

In January, House Ways and Means Committee Chairman Jason Smith (R-Mo.) argued that the Trump Accounts would be positively transformational for American children, including those from lower-income households.

According to Smith, the average annual income in his hometown is less than $26,000. For kids from such families, Trump Accounts provides a beneficial opportunity.

“It doesn’t matter if you live on a city block or a county road, you’re going to have this investment, and it will be transformational,” Smith said. “Americans’ lives are going to be affected in such a positive way for generations.”

The Treasury Department announced on May 28 that it had launched the Trump Accounts app on app stores nationwide.

Treasury Secretary Scott Bessent said that the app offers a “simple, secure way” for U.S. households to engage with the Trump Accounts program.

“By putting easy access to Trump Accounts directly in the hands of parents and young Americans, we are helping to ensure that America’s youth are included in this new era of economic participation,” Bessent said.