How Department Of Labor guidance affects ERISA treatment of Trump accounts
The Labor Department on June 17, 2026, issued Technical Release 2026-02 indicating that Trump accounts and related employer contribution programs generally should not fall within the scope of ERISA. The act sets forth the legal requirements governing private-sector employee benefit plans, including fiduciary standards, reporting and disclosure obligations, and protections for plan participants and beneficiaries.
The question is: Could a Trump account be a pension benefit plan as defined by ERISA section 3(2), which defines a pension plan as an arrangement that provide retirement income or result in the deferral of income to or beyond the termination of employment?
Because Trump account benefits often flow to dependents rather than employees, many arrangements are more likely to fall outside ERISA's pension plan definition under the Labor Department’s analysis. The technical release walks through three fact patterns, each evaluated separately under ERISA.
Scenario 1: Employer contributions to dependent accounts
When an employer contributes to a Trump account held by an employee's dependent, the benefit runs to the child and not the employee. Because ERISA's pension plan definition turns on retirement income provided to employees, the Labor Department’s view is that these arrangements generally should not be treated as ERISA pension plans, even if employer contributions are involved.
Scenario 2: Employer contributions to employee Trump accounts under section 128 plans
When an employer contributes under a section 128 plan to the employee's own Trump account (which can occur if the employee is an eligible individual during the growth period), the Labor Department looks to the employer's level of involvement rather than treating the arrangement as an ERISA pension plan automatically.
The guidance suggests that ERISA coverage generally may be avoided when the following conditions are met:
- Participation is voluntary
- The employer does not control or influence investment decisions
- The employer does not impose additional restrictions on use of funds
- The employer does not present the program as an employer-sponsored benefit plan
- The employer does not receive compensation in connection with the account
The fact that an employer imposes terms and conditions on contributions that are required to satisfy Internal Revenue Code requirements does not affect the above conclusion unless the employer or trustee restricts an employee's ability to roll funds into another Trump account beyond the restrictions already imposed by the code.
Scenario 3: Payroll deduction contributions and ERISA treatment during and after the growth period
The technical release also addresses arrangements where the employer does not contribute but allows employees to fund Trump accounts (or other individual retirement accounts) through payroll deductions outside a section 128 contribution program.
According to the Labor Department, the IRA payroll deduction safe harbor can keep these arrangements outside ERISA both during the growth period and after Trump accounts transition into traditional IRA treatment.
In both periods, the arrangement must satisfy the safe harbor, and employer contributions are not permitted. The safe harbor is generally available when:
- No employer contributions are made
- Employee participation is voluntary
- The employer does not endorse or control the arrangement
With respect to contributions during the growth period, the U.S. Department of the Treasury informed the Labor Department that these payroll deduction contributions are treated as contributions from other sources for tax purposes, meaning they create basis in the account and are analyzed separately from employer contributions.
After the growth period ends, the Labor Department confirms that payroll deduction arrangements may continue under the same safe harbor.
This approach may allow employers to help employees save while preserving the employer "neutrality" built into the safe harbor, referring to the requirement that the employer's role is limited to payroll processing and basic communication, without endorsement, sponsorship or control. The release also clarifies what employers can do while still maintaining neutrality. Employers may:
- Provide general educational materials
- Share information through internal platforms such as an intranet
- Facilitate payroll deductions and remittances
At the same time, employers must avoid the appearance of endorsing a specific product or provider or incorporating the arrangement into their formal benefit offerings.
Treasury guidance affecting ERISA and tax treatment of Trump accounts
The technical release incorporates several instances where the Treasury Department provides input that affects both ERISA and tax treatment. Most notably:
- Treasury indicated that employer contributions under section 128 may be offered through a cafeteria plan when directed to a dependent’s account, but not when directed to an employee’s own account.
- Treasury clarified that payroll deduction contributions outside section 128 during the growth period are treated as contributions from other sources and create basis.
- Treasury confirmed that a violation of the section 4975 prohibited transaction rules results in the account holder receiving a deemed distribution of the account under section 408(e)(2) can apply regardless of ERISA status because Trump accounts are a form of an IRA.
These points reinforce that program design decisions need to account for both benefits law and tax rules.
Prior guidance on ERISA and payroll deduction IRAs
This release is consistent with the Labor Department’s prior guidance that employer payroll deduction IRAs and Health Savings Accounts (HSAs) are not subject to ERISA.
What ERISA guidance on Trump accounts means for employers
The release makes certain important clarifications with respect to TACPs. Programs that are carefully structured around dependent beneficiaries or limited employer involvement generally appear to present fewer ERISA-related complications under the DOL's guidance, although employers should confirm program-specific treatment with benefits counsel.
Additional guidance from the Treasury Department and IRS addressing how TACPs should be administered to comply with section 128 is anticipated.
How an experienced tax advisor can help with Trump accounts and ERISA compliance
Even with the new guidance, employers must still navigate how they will monitor contribution limits, establish written plan requirements, and oversee payroll administration and employee communications in line with tax code requirements.
An experienced tax advisor can explain the tax consequences of a TACP and help evaluate how a TACP or similar arrangement aligns with an organization’s total rewards strategy. Employers should also consult benefits counsel for information regarding the application of ERISA to any particular benefit arrangement.
