Par. 2. Sections 1.128-1 through 1.129-2 are added to read as follows:
(a) Exclusion from gross income for contributions. Gross income of an employee does not include an amount paid by the employer as a contribution, including by salary reduction to the extent permitted under paragraph (d)(7) of this section, to the Trump account of the employee or of any dependent of the employee pursuant to a Trump account contribution program.
(b) Requirement of separate written plan.
(1) A Trump account contribution program must be set forth in a separate written plan that includes the items specified in paragraph (b)(2) of this section.
(2) The written plan must specify—
(i) The classes of employees eligible to participate;
(ii) The rules governing employer contributions, including the amount of contributions and whether contributions may be made via a section 125 cafeteria plan salary reduction arrangement;
(iii) The procedures under which an employee must designate the Trump account of the employee or of a dependent of the employee to receive contributions;
(iv) The certification, notice, and reporting procedures required under paragraphs (d), (f), and (g) of this section;
(v) The plan year; and
(vi) The procedures for correcting administrative failures and for furnishing notices to employees and trustees when amounts previously designated as section 128 contributions are subsequently determined not to be excludable from an employee's gross income under section 128(a) (for example, due to the nondiscrimination requirements of paragraph (e) of this section).
(c) Operational compliance. The employer must follow the terms of the Trump account contribution program's written plan.
(d) Permitted contributions —(1) Permitted recipients. A Trump account contribution program may make contributions only to a Trump account whose account beneficiary—
(i) Is in his or her growth period; and
(ii) Is an employee or an employee's dependent.
(2) Permitted amounts. The aggregate amount contributed with respect to any employee under a Trump account contribution program may not exceed the annual limit specified in paragraph (d)(5) of this section.
(3) Treatment of impermissible amounts. Amounts contributed by an employer that are not permitted under paragraph (d)(1) or (d)(2) of this section are not made pursuant to a Trump account contribution program (and thus are not section 128 contributions and are not excludable from income under paragraph (a) of this section).
(4) Certification and employer reliance —(i) In general. Except as provided in paragraph (d)(4)(iii) of this section, an employer may rely on an employee certification meeting the requirements of paragraph (d)(4)(ii) of this section for purposes of determining whether a contribution satisfies the requirements of paragraph (d)(1) of this section, unless the employer has actual knowledge that the certification is incorrect.
(ii) Content of employee certification. An employee certification relied on under paragraph (d)(4)(i) of this section must be made in writing, in paper or electronic form, and must include the following representations:
(A) The beneficiary of the account designated for the employer contribution is the employee or anticipated to be the dependent of the employee for the employee's taxable year in which the contribution is to be made;
(B) Such account beneficiary's date of birth; and
(C) No facts known to the employee would make such account beneficiary ineligible to receive a contribution to his or her Trump account for that calendar year.
(iii) No reliance on an employee certification that a Trump account is valid. An employer may not rely solely on an employee certification to establish that the recipient account is a valid Trump account. The employer must use a method reasonably designed to verify, through information provided by the trustee, payroll processor, or other service provider, that the contribution is made to a valid Trump account.
(5) Annual limits —(i) In general. With respect to an employee, total contributions under a Trump account contribution program for a calendar year may not exceed the lesser of—
(A) The amount specified in section 128(b), as adjusted for inflation under section 128(b)(2); or
(B) The amount specified under the terms of the Trump account contribution program's written plan.
(ii) Limit by employee. The annual limit applies with respect to the employee as an individual, taking into account section 128 contributions made with respect to the employee by all employers for the employee's taxable year. The excess of any section 128 contributions received by an individual over the amount specified in section 128(b), as adjusted for inflation under section 128(b)(2) for the taxable year, (for example, due to contributions being received from Trump account contribution programs of two employers of an employee), may not be excluded from the individual's gross income under section 128(a). Thus, an individual's section 128 contributions in excess of the section 128(b) limit must be included in gross income for the employee's taxable year. See paragraph (d)(5)(iii) of this section for the effect of such contributions in excess of the limit under section 128(b) on the Trump account contribution program.
(iii) Effect on plan. Notwithstanding the provisions of paragraph (d)(5)(ii) of this section, an arrangement does not fail to be a Trump account contribution program by reason of an individual being in receipt of excess contributions for the taxable year, provided that the plan prohibits contributions under that plan with respect to an employee in excess of the amount specified in paragraph (d)(5)(i) of this section.
(iv) Allocation. A program may permit the contribution to be allocated (either by the terms of the program or by election by the employee) among the Trump account of the employee and the Trump account of one or more dependents of the employee, provided that the aggregate amount an employer contributes with respect to an employee for the calendar year does not exceed the limit specified in this paragraph (d)(5).
(v) Section 530A(c)(2) limit. The employer does not have any obligation with respect to compliance with the section 530A(c)(2) limit.
(vi) Examples. The rules of this paragraph (d)(5) are illustrated by the following examples. The examples assume that the Trump account contribution program written plan allows for contributions up to $2,500, via salary reduction or otherwise; that there are no nondiscrimination failures; that there are no other contributions to the Trump account(s) for the year; and that the Trump account contribution program has a calendar year plan year.
(A) Example 1. For 2027, Employee has two dependents and works for an employer that offers a Trump account contribution program under which the employer provides a section 128 contribution in the amount of $2,500 with respect to each employee. The program allows Employee to allocate the section 128 contribution among the Trump accounts of the two dependents, but the total amount allocated by Employee may not exceed $2,500 for 2027. The program complies with the annual limit requirement of this paragraph (d)(5). The conclusion would not change if the section 128 contributions were made via salary reduction.
(B) Example 2. For 2027, Employee and Employee's spouse, who are married and file jointly, have one dependent. The employers of Employee and Employee's spouse each offer Trump account contribution programs under which each employer provides a section 128 contribution in the amount of $2,500 with respect to each employee. Employee and Employee's spouse each allocate the $2,500 section 128 contribution to the Trump account of their dependent through their respective Trump account contribution programs. The programs comply with the annual limit requirement of this paragraph (d)(5). The conclusion would not change if the section 128 contributions were made via salary reduction.
(C) Example 3. The facts are the same as in paragraph (d)(5)(vi)(B) of this section ( Example 2 ), except Employee and Employee's spouse both work for the same employer. Employee and Employee's spouse each allocate the $2,500 section 128 contribution to the Trump account of their dependent through the employer's Trump account contribution program. The program complies with the annual limit requirement of this paragraph (d)(5). The conclusion would not change if the section 128 contributions were made via salary reduction.
(D) Example 4. For 2027, Individual has one dependent. Individual is employed by two unrelated employers, each of which offers a Trump account contribution program under which the employer provides a section 128 contribution in the amount of $2,500 with respect to each employee. Each plan prohibits contributions under that plan with respect to an employee in excess of the amount specified in section 128(b), as adjusted for inflation under section 128(b)(2). Individual allocates the $2,500 section 128 contribution under each program with respect to a Trump account for Individual's dependent. The programs comply with the annual limit requirement of this paragraph (d)(5). Neither employer is required to provide a corrective notice described in paragraph (h)(4) of this section solely because of the other employer's contribution. However, Individual must include the excess contribution of $2,500 in Individual's gross income on Individual's Federal income tax return for that taxable year. The conclusion would not change if the section 128 contributions were made via salary reduction.
(E) Example 5. For 2027, Employee has one dependent and works for Employer, which offers a Trump account contribution program under which Employer provides a section 128 contribution in the amount of $2,500 with respect to each employee. Employee allocates the $2,500 section 128 contribution to the Trump account of Employee's dependent through Employer's Trump account contribution program. In addition to the section 128 contribution made under the Trump account contribution program, Employer contributes an additional $1,000 to the Trump account that is not a section 128 contribution made under the Trump account contribution program to Employee's dependent's Trump account. No other exclusion from gross income or wages applies to the $1,000 contribution. In accordance with the requirements of paragraph (h)(1) of this section, Employer identifies the $2,500 to the trustee as a section 128 contribution and does not identify the $1,000 as a section 128 contribution. On Employee's Form W-2, Employer reports the $2,500 to Employee as a section 128 contribution, and the $1,000 to Employee as gross income and wages. The program complies with the annual limit requirement of this paragraph (d)(5).
(6) Selection of trustee. An arrangement is not a Trump account contribution program if an employer limits contributions to Trump accounts held by a particular trustee or trustees.
(7) Section 125 salary reduction arrangements —(i) In general. A Trump account contribution program may be offered via salary reduction under a section 125 cafeteria plan but only if the contribution is made to a Trump account of the dependent of an employee. A contribution to a Trump account of an employee may not be offered via salary reduction under a section 125 cafeteria plan.
(ii) Elections. A section 125 cafeteria plan providing for section 128 contributions through salary reduction may permit employees to make a prospective salary reduction election or change or revoke a salary reduction election for section 128 contributions (for example, to increase or decrease a salary reduction election) at any time during the plan year, provided that the election is effective only as to salary that is not yet currently available. The section 125 cafeteria plan must specifically describe the Trump account contribution benefit and permit participants to prospectively change or revoke elections at least monthly, before salary becomes currently available.
(e) No discrimination in favor of HCEs. A Trump account contribution program must satisfy the nondiscrimination requirements of § 1.128-3(a) through (c). An arrangement that fails to satisfy such requirements will not be considered a Trump account contribution program with respect to HCEs participating in the program, but will not affect the program's status as a Trump account contribution program with respect to the NHCE participants.
(f) Notification to eligible employees. Reasonable notification of the availability and terms of the Trump account contribution program must be provided to all eligible employees.
(g) Statement of contributions. A written statement showing the amount of section 128 contributions that were made for an employee during the previous calendar year under the employer's Trump account contribution program must be furnished to that employee. This requirement is satisfied by including the amount of Trump account contributions on the employee's Form W-2, Wage and Tax Statement, in the manner specified in the form's instructions for reporting of section 128 contributions.
(h) Employer communications —(1) Affirmative statement. With respect to an amount contributed under a Trump account contribution program, the employer must, at the time the amount is transmitted to the trustee, affirmatively identify the amount as a section 128 contribution in writing to the trustee.
(2) Procedures. The employer must adopt procedures to ensure that section 128 contributions are properly identified and to notify the trustee when a contribution is a section 128 contribution and when a contribution previously identified as a section 128 contribution is not a section 128 contribution.
(3) Reliance by the trustee. The trustee of a Trump account receiving a contribution may rely on the identification of a contribution as a section 128 contribution for purposes of section 530A until such time that the trustee receives a corrective notice pursuant to paragraph (h)(4) of this section or has contrary knowledge.
(4) Corrective notice —(i) In general. If an amount previously identified under paragraph (h)(1) of this section as a section 128 contribution is subsequently determined not to be a section 128 contribution, in whole or in part, the employer must provide notice in writing to the trustee identifying the affected account, the calendar year in which the contribution was made, and the amount determined not to be a section 128 contribution.
(ii) Timing. The notice described in paragraph (h)(4)(i) of this section must be furnished within a reasonable period of time following the date the employer determines that an amount is not a section 128 contribution. For purposes of this section, 21 calendar days following the date the employer makes this determination is deemed to be a reasonable period of time.
(i) Applicability date. This section applies to plan years beginning on or after the date of publication of the final rule in the Federal Register .