The AICPA told the IRS in an Oct. 16 letter that employers cannot realistically launch Trump account contribution programs in 2026 under the proposed rules.
If you run a store with W-2 employees, this is the first new payroll benefit rule that could land on your desk, and the accountants say it is not ready. If your team is contractors and virtual assistants, which describes a lot of dropshipping operations at Ecommerce Paradise, the rules mostly bypass you, and knowing exactly why saves you time and money.
Below: what the letter asks for, how the rules got here, why I think most owners should skip the employer program for now, and five moves for this week. Everything before my analysis section is reported fact with sources. Everything after it is my read. I am not a tax or legal advisor, so run your own numbers past a CPA.
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AICPA Letter Says Employers Can’t Launch Trump Accounts in 2026
The American Institute of CPAs sent the letter to the Treasury Department and the IRS on Oct. 16, 2026, according to the Journal of Accountancy, which reported it on Oct. 23. The AICPA publicly released its recommendations on Oct. 22, per its own news page.
The letter says it is unlikely that “the combination of sufficient guidance, vendor capabilities, and employer organization” will exist in time for employers to stand up programs this year. The AICPA wants Treasury and the IRS to push the timeline back and to let 2026 contributions be made through 2027.
It also asks for a centralized clearinghouse, or a standardized transmission platform, so an employer can send contributions through one interface. The reason is a rule in the proposal that bars employers from limiting contributions to a single trustee. Without that limit, the Journal of Accountancy reports, a large employer could end up dealing with 50 or more trustees.
The remaining requests are procedural. The AICPA wants more flexibility in the nondiscrimination rules, simplified compliance procedures, clearer payroll reporting, transition relief, and coordination with the IRS correction program for IRAs. That last item connects to the retirement fix rules I covered in IRS rewrites retirement plan fix rules, adds an IRA program.
Michelle Zou, senior manager of tax policy and advocacy at the AICPA, said in the release that clearer, standardized rules would reduce administrative complexity and make errors easier to correct. The New York State Society of CPAs carried the same summary on Oct. 24.
Here is what the program actually is. Under Section 128, an employer may contribute up to $2,500 per year to an employee’s Trump account, or to the account of the employee’s dependent, and the amount is excluded from the employee’s taxable income. The IRS and Treasury proposed the regulations on Aug. 11, 2026, and the IRS release says the program must be a separate written plan for the exclusive benefit of employees and must meet nondiscrimination requirements.
According to Thomson Reuters Checkpoint, the contributions are excluded from federal income tax withholding but remain subject to FICA and FUTA. They go in boxes 3 and 5 of the W-2, stay out of box 1, and carry a new Box 12 code, “TA.”
There is a counterpoint. The AICPA is asking for relief, and none of the coverage I found reports an IRS answer yet. The program is also voluntary, so no employer is forced to offer it. Rachael Walker of EY, quoted by Thomson Reuters, called the August change to the nondiscrimination math “a meaningful mathematical change that can substantially improve the testing outcomes,” so the IRS has already moved once in employers’ favor.
How the $2,500 Employer Trump Account Rules Got Here
Trump accounts come from the 2025 tax law, H.R. 1, Public Law 119-21. Section 530A creates a new type of IRA for eligible children, and Section 6434 adds a $1,000 government contribution for children born after Dec. 31, 2024 and before Jan. 1, 2029, per the Journal of Accountancy. A parent or guardian generally elects the account.
Contributions opened July 6, 2026, according to Thomson Reuters. The accounts have a $5,000 annual limit from all sources, and employer money counts toward that cap.
The IRS issued Notice 2025-68 first, then the Aug. 11 proposed regulations. Comments were due Sept. 25, and a public hearing was set for Oct. 15. Thomson Reuters counted 34 comments on file as of Sept. 22. The IRS estimates the rules touch about 73 million children, 44 million families and 3 million employers, per the Journal of Accountancy’s August coverage.
That August coverage pins down who counts. The rules use the common-law definitions of employee and employer. Partners, sole proprietors, directors serving solely as directors, and 2% S corporation shareholders are not treated as eligible employees. A self-employed owner can offer a program to employees but cannot participate in it personally.
Other details from the proposal: the $2,500 limit is per employee, not per child, and an employee with several employers can exclude only $2,500 across all of them. Employees can fund a dependent’s account through salary reduction in a cafeteria plan, but salary reduction into the employee’s own account would be impermissible deferred compensation. The proposal also includes a nondiscrimination safe harbor for employers that match the government’s $1,000 pilot contribution.
The nondiscrimination test is the part that bites small teams. Thomson Reuters describes a 55% average benefits test: average employer contributions for non-highly compensated employees must be at least 55% of the average for highly compensated employees. The August proposal lets employers leave out employees who receive no contribution during the year. The same rules apply to dependent care assistance programs, whose annual limit rose from $5,000 to $7,500 under the new law.
This is one of several IRS proposals landing on employers this fall. The agency also floated ACA subsidy verification rules for 2027. The 2027 payroll numbers are moving too, as the Social Security wage base rises to $192,300 (my breakdown).
Why Most Store Owners Can Skip the $2,500 Trump Account Rules
My read: unless you run real W-2 payroll, this program does nothing for you, and even if you do, 2026 is the wrong year to build it.
Start with who is eligible. The program covers common-law employees. A lot of dropshipping operations run on contractors, offshore virtual assistants and agency retainers. If you hire through a marketplace such as OnlineJobs.ph, those workers are usually engaged as independent contractors, and a contractor is not an employee under the common-law test. Classification depends on the facts of the relationship, so a CPA should confirm yours. If you want the global-hiring side, I compared the options in my Deel alternatives breakdown.
Next, who you are. If your store is a single-member LLC taxed as a sole proprietorship, a partnership, or an S corporation where you own more than 2%, you cannot take part in an employer program yourself. The rule is about your staff, not your kids. That is why entity choice matters here, and why I send people to my business formation page before they hire anyone.
Now the math, and this is hypothetical. Say you have four W-2 employees and give each the full $2,500. That is $10,000 of contributions. The sources say FICA still applies, so the employer share of 7.65% adds $765, for a total employer cost of $10,765. That is the same cost as handing the same $10,000 over as a cash bonus. What changes is the employee’s side, because the contribution skips federal income tax withholding. Any gain is the employee’s, and it only lands if your team has kids with open accounts and wants the money parked there.
Then the admin load. You need a separate written plan, employee notices, employee certifications, a way to verify each account through a trustee or payroll processor, new W-2 reporting, and nondiscrimination testing. The AICPA’s point is that all of this has to work across your payroll provider and multiple trustees. If your provider has not announced support, building it by hand is a bad use of a small team’s time. When I look at payroll options for owners, Gusto is where I would ask the support question first. Mercury also launched payroll recently (details here), though I have not confirmed that either one supports this program.
Here are the thresholds I would use. With zero W-2 employees, ignore the program. With one to three, wait for final regulations and ask your payroll provider whether they will support it. With a larger payroll, or a plan to grow into one, model the nondiscrimination test before you promise anything. Thomson Reuters’ experts recommend exactly that: model workforce demographics and expected participation first. My read: on a team of four, one person opting out will swing the averages a lot, so run the numbers before you promise anything.
The honest counterpoint is that it can be a cheap recruiting perk. The IRS says it expects the rules to make employers more likely to offer these programs, and a $2,500 tax-favored benefit could beat a small cash bonus for staff with young children. If you already run clean payroll and have staff who ask for family benefits, it is worth a CPA conversation once the rules are final. If you are a one-person store using freelancers, this is background noise.
The bigger lesson is that every new compliance rule taxes the owner who does everything personally. Store owners lose weekends to payroll, tax codes and vendor forms instead of suppliers and ads. If you would rather hand that load off, my team’s turnkey done-for-you service builds and runs the store so your hours go to decisions that make money.
Working out payroll and benefits for the first time? Bring the questions to other store owners and me inside the community. Join the Skool community →
5 Payroll Moves to Make Before the Final Trump Account Rules
None of these require you to build a Trump account program. They put your books and hiring in shape so the final rules are easy to read when they arrive.
- Count your true W-2 employees. Write down every person on payroll versus every person you pay by invoice. If the W-2 number is zero, you are done with this rule. If it is above zero, list who they are and what each earns, because the nondiscrimination test compares higher-paid and lower-paid employees.
- Ask your payroll provider one question in writing: will you support Section 128 contributions, the Box 12 code “TA,” and account verification? If you are shopping, my ADP alternatives comparison lists payroll tools with prices. QuickBooks is worth a look if your books already live there. Get the answer in an email so you have it on record.
- Hold off on writing a plan document until the regulations are final. A separate written plan is required, and drafting it against proposed text risks a rewrite. Put a calendar reminder to check the IRS newsroom in 30 days for any extension or final rule.
- If you want to fund a child’s account yourself, do it personally, outside the business. Remember the $5,000 annual cap from all sources and the $1,000 pilot contribution, which a parent elects on Form 4547 for a U.S. citizen child born from 2025 through 2028, per the IRS. For the owner-level retirement side, my guide to Solo 401(k) contribution limits covers what you can put away through your own business.
- Tighten your bookkeeping so a benefit like this would be easy to add later. Automated books from Finaloop give your CPA clean payroll and expense records. If you want to talk through your setup with me, start with my Explore Turnkey Builds.
Frequently Asked Questions
Do I have to offer Trump account contributions to my employees?
No. The employer program is voluntary under Section 128, per the IRS. You only face rules if you decide to start one.
Can I contribute to Trump accounts for my own kids through my LLC?
Not through the employer program. Partners, sole proprietors, directors serving solely as directors, and 2% S corporation shareholders are not treated as eligible employees, according to the Journal of Accountancy. Personal contributions are a separate matter, so ask your CPA, and read my tax-efficient financial plan guide for the bigger picture.
Do the rules apply to my virtual assistants and freelancers?
The rules use the common-law definition of employee, so properly classified independent contractors fall outside them. Misclassification is its own risk, which is a CPA question. If you hire abroad, my Upwork alternatives post covers the marketplaces. Upwork is the big one.
What is the dollar limit for employer contributions?
Employers can contribute up to $2,500 per employee per year tax-free to the employee, per the IRS release. The account itself has a $5,000 annual limit from all sources, according to Thomson Reuters.
Will the IRS grant the delay the AICPA wants?
Unknown. The AICPA asked on Oct. 16, and I found no reported IRS response as of Oct. 27. The proposed rules are not final, so plan around that uncertainty.
Does this change how I should structure my store’s entity?
Not by itself. Entity choice should follow liability, taxes and banking, and my Mercury account walkthrough shows what banks ask for once the LLC exists. Banks and card issuers also treat entities differently, as I showed in Chase 3/24 denials hitting sole props harder than LLCs.
Tired of payroll and compliance eating your week? Let my team build and run your high-ticket store for you. See the turnkey done-for-you service →
I will keep watching for the IRS response and the final regulations. If you move money overseas to pay a team, a multi-currency account like Wise keeps the fees down. Subscribe to the YouTube channel for daily breakdowns. More breaking news coming through the day.
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Trevor Fenner is an ecommerce entrepreneur and world traveler from Seattle, Washington, and the founder of Ecommerce Paradise, a platform focused on helping entrepreneurs build and scale profitable high-ticket ecommerce and dropshipping businesses. With over a decade of hands-on experience, Trevor specializes in high-ticket dropshipping strategy, niche and product selection, supplier recruiting and onboarding, Google & Bing Shopping ads, ecommerce SEO, and systems-driven automation and scaling. Through Ecommerce Paradise, he provides free education via in-depth guides like How to Start High-Ticket Dropshipping, advanced training through the High-Ticket Dropshipping Masterclass, and fully done-for-you turnkey ecommerce services for entrepreneurs who want a faster, more hands-off path to growth. Trevor is known for emphasizing sustainable, real-world ecommerce models over hype-driven tactics, helping store owners build scalable, sellable, and location-independent brands.
He maintains homes in Seattle and Bali, spends most of the year overseas, and usually returns to Seattle for about a month each summer.
