The IRS has finalized a W-2 reporting code for Trump account employer contributions. Box 12, Code TA, appears in the 2026 instructions for Forms W-2 and W-3, and it is the final version, not a draft.
Now the question is what's most important for a payroll team preparing for January.
How employers report Trump account contributions on the W-2
The short answer
Employer contributions to a Trump account, for an employee or an employee's dependent, are reported in Box 12 using Code TA, per the IRS's 2026 General Instructions for Forms W-2 and W-3. The code applies to contributions made under a Section 128 Trump account contribution program, which are capped at $2,500 per employee per year and excluded from the employee's gross income for federal income tax purposes.
Whether offering these contributions creates ERISA exposure is a separate question, addressed by DOL's Technical Release 2026-02, issued June 17, 2026. Learn more in The 4 ERISA guardrails on Trump Account contributions.
How we got here
- Jul 4, 2025. OBBBA becomes law, creating Trump accounts (Section 530A) and Section 128 employer contributions.
- Dec 2, 2025. IRS Notice 2025-68 provides initial guidance on contributions, investments, and reporting.
- Jan–Mar 2026. IRS finalizes the 2026 W-2 instructions, including Box 12, Code TA.
- Jun 17, 2026. DOL Technical Release 2026-02 addresses ERISA status.
- Jul 4, 2026. Contributions to Trump accounts become allowed.
- Aug 11, 2026. Treasury and the IRS publish proposed regulations on Section 128 contributions (REG-101355-26).
What is a Trump account
Trump accounts are a new type of IRA, created under Section 530A of the tax code when the One Big Beautiful Bill Act became law on July 4, 2025. An eligible individual is a child who hasn't turned 18 before the end of the year the election is made and who has a Social Security number. The account is generally established by a parent or guardian.
An account doesn't exist automatically. Someone, generally a parent or guardian, has to elect to open one, using Form 4547, Trump Account Election(s). The same form lets the family elect a one-time $1,000 pilot program contribution from the federal government, available to U.S. citizen children born from 2025 through 2028. Practically, that means a meaningful share of the workforce may already have accounts set up for new dependents before an employer program is even on the table.
The $2,500 limit: per employee, not per dependent
Section 128 of the tax code lets an employer contribute to a Trump account on behalf of an employee or an employee's dependent. Per DOL's technical release, those contributions:
- Are capped at $2,500 per employee, per year (adjusted for inflation after 2027)
- Are excluded from the employee's gross income for federal income tax purposes
- Count against the account's overall $5,000 annual contribution limit, alongside anything contributed from other sources
That cap is worth stating precisely, since it's an easy detail to get wrong: it's per employee, not per dependent. An employee with three kids doesn't unlock three separate allowances. Contributions to any combination of that employee's own account and their dependents' accounts share the same $2,500 total.
The proposed regulations add three details. The limit applies across all of an employee's employers, not per employer. An employer can split the contribution among the accounts of an employee's dependents, as long as the total stays within the limit. And employers have no obligation to monitor the account's $5,000 limit.
$2,500
The maximum an employer can contribute per employee, per year, under Section 128, counted toward the account's $5,000 aggregate annual cap.
How Trump account employer contributions show up on the W-2
Here's the mechanic, traced through: an employer contributes $2,500 to an employee's dependent's Trump account at some point during the year. That amount doesn't appear in Box 1, because Section 128 contributions are excluded from gross income for federal income tax purposes. When the employee's W-2 is issued the following January, the contribution appears in Box 12 with Code TA.
The exclusion applies to income tax only. Under the proposed regulations, the contribution is still subject to FICA and FUTA, so it still counts toward Social Security and Medicare wages, but it is not subject to federal income tax withholding. Contributions above the limit, or made outside a qualifying program, are wages and income to the employee.
Nothing about the W-2 flow is still being worked out. It's the same box, the same code, for every employer making this kind of contribution in 2026. The proposed regulations would also let that W-2 entry satisfy the requirement to give employees a written statement of their contributions. For teams that already track pre-tax exclusions and W-2 box assignments across other benefit types, the reporting logic will look familiar.
The contribution itself has to run through a formal arrangement, which the statute calls a "section 128(c) Trump account contribution program," not an ad hoc payroll add-on.
What a Section 128 program requires
A Section 128 program has its own requirements beyond the ERISA question addressed above. The statute defines it as a separate written plan of an employer for the exclusive benefit of its employees, and it points to Section 129, the same section governing dependent care assistance programs, as the model.
That means the program needs to satisfy nondiscrimination rules for contributions and benefits, eligibility, and average benefits. It also needs to give eligible employees reasonable notice of the program and a written statement of what's been contributed on their behalf.
None of that requires an ERISA-style plan document. It does require a written plan, tracked contributions, and testing before the program runs. Under the proposed regulations, an employer would also need to:
- Verify that each contribution goes to a valid Trump account, using information from the trustee, a payroll processor, or another service provider
- Tell the trustee, at the time of the contribution, that the amount is a Section 128 contribution, and send a corrective notice within 21 calendar days if it later turns out not to be one
- Accept contributions to any trustee, because a program that limits contributions to particular trustees wouldn't qualify
- Exclude self-employed individuals, including partners, sole proprietors, and 2% S corporation shareholders, from participating
The proposed regulations also include a safe harbor from nondiscrimination testing for employers that match the $1,000 pilot contribution on the same terms for all eligible employees.
Payroll deduction, salary reduction, and the cafeteria plan wrinkle
Most employers thinking through implementation will land on payroll deduction as the mechanism, and that's where a cafeteria plan detail matters.
Per IRS Notice 2025-68, a Section 128 employer contribution can run through salary reduction under a Section 125 cafeteria plan when the contribution goes to the employee's dependent's Trump account. It can't run that way when the contribution goes to the employee's own account, because doing so would create a deferred compensation arrangement under Section 125(d)(2)(A), which cafeteria plans aren't permitted to be. The proposed regulations carry this rule forward and would require a cafeteria plan that includes these contributions to let employees change or revoke their elections at least monthly.
That distinction affects program design more than it affects the mechanics of running the deduction itself, but it's a detail worth knowing from day one rather than discovering it during testing.
Employees can also fund their own account through after-tax payroll deduction with no employer contribution. DOL's IRA payroll deduction safe harbor covers that path, as laid out in The 4 ERISA guardrails on Trump Account contributions.
What's settled and what isn't
Two things are locked in. The W-2 reporting mechanic, Box 12 Code TA, is final as of the 2026 General Instructions for Forms W-2 and W-3. And DOL's position that Trump account contribution programs generally sit outside ERISA is stated plainly in Technical Release 2026-02, issued June 17, 2026.
What isn't final: the Section 128 program rules. Treasury and the IRS published proposed regulations on August 11, 2026, covering the written plan, nondiscrimination testing, notices, salary reduction, and payroll tax treatment. Comments closed on September 25, 2026, and a public hearing is scheduled for October 15, 2026. The IRS has since changed the hearing to telephonic-only.
The proposed regulations would apply to plan years beginning on or after the date final regulations are published, and employers may rely on them for earlier plan years. Treasury and the IRS also plan a separate proposed rule on how contributions above the account's $5,000 limit are treated.
See our latest Compliance Corner roundup for what else is changing as year-end approaches.
Note: This information is for informational purposes only and does not constitute formal tax, legal, or compliance advice. Always consult with qualified tax advisors, legal counsel, and your organization's internal teams for guidance specific to your situation. Additional regulations may apply. For the most accurate and up-to-date information, refer to official government resources and regulatory agencies.
