# Bulletin No. 2026–37

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URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A81c8ca1d8c100480

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

HIGHLIGHTS
OF THIS ISSUE




Bulletin No. 2026–37
September 8, 2026

These synopses are intended only as aids to the reader in
identifying the subject matter covered. They may not be
relied upon as authoritative interpretations.

INCOME TAX
REG-101355-26, page 247.

These proposed regulations provide guidance on employer contributions to Trump accounts under section 128 of the Internal
Revenue Code. They also provide guidance on nondiscrimination requirements for purposes of both section 128 Trump
account contribution programs and section 129 dependent
care assistance programs.

REG-103844-26, page 272.

The Notice of Proposed Rulemaking provides an election
under which controlled foreign corporations (CFCs) would not
compute or recognize foreign currency gain or loss under section 987(3), except in connection with certain inbound transactions. The proposed regulations would provide that a CFC
generally does not compute or recognize section 987 gain or

Finding Lists begin on page ii.

loss for taxable years in which the CFC exemption election is
in effect. However, a CFC would be required to recognize section 987 gain or loss arising before the election is made, and
would be required to recognize section 987 gain in connection
with certain inbound transactions.

REG-115145-25, page 298.

These proposed regulations provide for the allocation of foreign taxes of foreign corporations affected by the repeal of
the one-month deferral election. These proposed regulations
also provide for the disallowance of foreign tax credits on
certain distributions of previously taxed earnings and profits.

Rev. Rul. 2026-17, page 247.

Federal rates; adjusted federal rates; adjusted federal longterm rate, and the long-term tax exempt rate. For purposes
of sections 382, 1274, 1288, 7872 and other sections of
the Code, tables set forth the rates for September 2026.

The IRS Mission
Provide America’s taxpayers top-quality service by helping
them understand and meet their tax responsibilities and
enforce the law with integrity and fairness to all.

Introduction
The Internal Revenue Bulletin is the authoritative instrument
of the Commissioner of Internal Revenue for announcing official rulings and procedures of the Internal Revenue Service
and for publishing Treasury Decisions, Executive Orders, Tax
Conventions, legislation, court decisions, and other items of
general interest. It is published weekly.
It is the policy of the Service to publish in the Bulletin all substantive rulings necessary to promote a uniform application
of the tax laws, including all rulings that supersede, revoke,
modify, or amend any of those previously published in the
Bulletin. All published rulings apply retroactively unless otherwise indicated. Procedures relating solely to matters of internal management are not published; however, statements of
internal practices and procedures that affect the rights and
duties of taxpayers are published.
Revenue rulings represent the conclusions of the Service
on the application of the law to the pivotal facts stated in
the revenue ruling. In those based on positions taken in rulings to taxpayers or technical advice to Service field offices,
identifying details and information of a confidential nature are
deleted to prevent unwarranted invasions of privacy and to
comply with statutory requirements.
Rulings and procedures reported in the Bulletin do not have the
force and effect of Treasury Department Regulations, but they
may be used as precedents. Unpublished rulings will not be
relied on, used, or cited as precedents by Service personnel in
the disposition of other cases. In applying published rulings and
procedures, the effect of subsequent legislation, regulations,
court decisions, rulings, and procedures must be considered,
and Service personnel and others concerned are cautioned

against reaching the same conclusions in other cases unless
the facts and circumstances are substantially the same.
The Bulletin is divided into four parts as follows:
Part I.—1986 Code.
This part includes rulings and decisions based on provisions
of the Internal Revenue Code of 1986.
Part II.—Treaties and Tax Legislation.
This part is divided into two subparts as follows: Subpart A,
Tax Conventions and Other Related Items, and Subpart B,
Legislation and Related Committee Reports.
Part III.—Administrative, Procedural, and Miscellaneous.
To the extent practicable, pertinent cross references to these
subjects are contained in the other Parts and Subparts. Also
included in this part are Bank Secrecy Act Administrative
Rulings. Bank Secrecy Act Administrative Rulings are issued
by the Department of the Treasury’s Office of the Assistant
Secretary (Enforcement).
Part IV.—Items of General Interest.
This part includes notices of proposed rulemakings, disbarment and suspension lists, and announcements.
The last Bulletin for each month includes a cumulative index
for the matters published during the preceding months. These
monthly indexes are cumulated on a semiannual basis, and are
published in the last Bulletin of each semiannual period.

The contents of this publication are not copyrighted and may be reprinted freely. A citation of the Internal Revenue Bulletin as the source would be appropriate.

September 8, 2026 

Bulletin No. 2026–37

Part I
Section 1274.—
Determination of Issue
Price in the Case of Certain
Debt Instruments Issued for
Property
(Also Sections 42, 280G, 382, 467, 468, 482, 483,
1288, 7520, 7702, 7872.)

Rev. Rul. 2026-17
This revenue ruling provides various prescribed rates for federal income

AFR
110% AFR
120% AFR
130% AFR
AFR
110% AFR
120% AFR
130% AFR
150% AFR
175% AFR
AFR
110% AFR
120% AFR
130% AFR

Short-term adjusted AFR
Mid-term adjusted AFR
Long-term adjusted AFR

Bulletin No. 2026–37

tax purposes for September 2026 (the
current month). Table 1 contains the
short-term, mid-term, and long-term
applicable federal rates (AFR) for the
current month for purposes of section
1274(d) of the Internal Revenue Code.
Table 2 contains the short-term, midterm, and long-term adjusted applicable federal rates (adjusted AFR) for the
current month for purposes of section
1288(b). Table 3 sets forth the adjusted
federal long-term rate and the longterm tax-exempt rate described in section 382(f). Table 4 contains the appro-

priate percentages for determining the
low-income housing credit described in
section 42(b)(1) for buildings placed in
service during the current month. However, under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service
after July 30, 2008, shall not be less
than 9%. Finally, Table 5 contains the
federal rate for determining the present
value of an annuity, an interest for life
or for a term of years, or a remainder or
a reversionary interest for purposes of
section 7520.

REV. RUL. 2026-17 TABLE 1
Applicable Federal Rates (AFR) for September 2026
Period for Compounding
Annual
Semiannual
Quarterly
Short-term
4.18%
4.14%
4.12%
4.60%
4.55%
4.52%
5.03%
4.97%
4.94%
5.45%
5.38%
5.34%
Mid-term
4.49%
4.44%
4.42%
4.94%
4.88%
4.85%
5.40%
5.33%
5.29%
5.85%
5.77%
5.73%
6.77%
6.66%
6.61%
7.92%
7.77%
7.70%
Long-term
5.12%
5.06%
5.03%
5.65%
5.57%
5.53%
6.16%
6.07%
6.02%
6.69%
6.58%
6.53%

Annual
3.16%
3.40%
3.88%

REV. RUL. 2026-17 TABLE 2
Adjusted AFR for September 2026
Period for Compounding
Semiannual
3.14%
3.37%
3.84%

247

Quarterly
3.13%
3.36%
3.82%

Monthly
4.10%
4.51%
4.92%
5.32%
4.40%
4.83%
5.27%
5.70%
6.57%
7.65%
5.01%
5.51%
5.99%
6.49%

Monthly
3.12%
3.35%
3.81%

September 8, 2026

REV. RUL. 2026-17 TABLE 3
Rates Under Section 382 for September 2026
Adjusted federal long-term rate for the current month
Long-term tax-exempt rate for ownership changes during the current month (the highest of the adjusted federal
long-term rates for the current month and the prior two months.)

3.88%
3.88%

REV. RUL. 2026-17 TABLE 4
Appropriate Percentages Under Section 42(b)(1) for September 2026
Note: Under section 42(b)(2), the applicable percentage for non-federally subsidized new buildings placed in service after
July 30, 2008, shall not be less than 9%.
Appropriate percentage for the 70% present value low-income housing credit
8.12%
Appropriate percentage for the 30% present value low-income housing credit
3.48%
REV. RUL. 2026-17 TABLE 5
Rate Under Section 7520 for September 2026
Applicable federal rate for determining the present value of an annuity, an interest for life or a term of years,
or a remainder or reversionary interest

Section 42.—Low-Income
Housing Credit
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
September 2026. See Rev. Rul. 2026-17, page 247.

Section 280G.—Golden
Parachute Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
September 2026. See Rev. Rul. 2026-17, page 247.

Section 382.—Limitation
on Net Operating Loss
Carryforwards and
Certain Built-In Losses
Following Ownership
Change
The adjusted applicable federal long-term rate
is set forth for the month of September 2026. See
Rev. Rul. 2026-17, page 247.

Section 467.—Certain
Payments for the Use of
Property or Services
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
September 2026. See Rev. Rul. 2026-17, page 247.

Section 468.—Special
Rules for Mining and Solid
Waste Reclamation and
Closing Costs
The applicable federal short-term rates are set
forth for the month of September 2026. See Rev.
Rul. 2026-17, page 247.

Section 482.—Allocation
of Income and Deductions
Among Taxpayers
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
September 2026. See Rev. Rul. 2026-17, page 247.

5.40%

Section 483.—Interest on
Certain Deferred Payments
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
September 2026. See Rev. Rul. 2026-17, page 247.

Section 1288.—Treatment
of Original Issue Discount
on Tax-Exempt Obligations
The adjusted applicable federal short-term, midterm, and long-term rates are set forth for the month
of September 2026. See Rev. Rul. 2026-17, page 247.

Section 7520.—Valuation
Tables
The applicable federal mid-term rates are set
forth for the month of September 2026. See Rev.
Rul. 2026-17, page 247.

Section 7872.—Treatment
of Loans With BelowMarket Interest Rates
The applicable federal short-term, mid-term,
and long-term rates are set forth for the month of
September 2026. See Rev. Rul. 2026-17, page 247.

September 8, 2026

248

Bulletin No. 2026–37

Part IV
Notice of Proposed
Rulemaking
Employer Contributions
to Trump Accounts and
Nondiscrimination Rules for
Dependent Care Assistance
Programs
REG-101355-26
AGENCY: Internal Revenue Service
(IRS), Treasury.
ACTION: Notice of proposed rulemaking
and notice of public hearing.
SUMMARY: This document contains
proposed regulations that would provide
guidance with respect to employer contributions to Trump accounts, including
applicable nondiscrimination rules, and
the nondiscrimination rules for dependent
care assistance programs. This document
also provides a notice of a public hearing
on the proposed regulations. The proposed
regulations would affect employers maintaining a Trump account contribution program or a dependent care assistance program and employees participating in those
programs.
DATES: Comments: Electronic or written
comments must be received by September
25, 2026. Public Hearing: The public hearing is scheduled to be held on October 15,
2026 at 10 a.m. ET. Requests to speak and
outlines of topics to be discussed at the
public hearing must be received by September 25, 2026. If no requests to speak
or outlines are received by September 25,
2026, the public hearing will be cancelled.
Requests to attend the public hearing must
be received by 5 p.m. ET on October 13,
2026.

ADDRESSES: Commenters are strongly
encouraged to submit public comments
electronically. Submit electronic submissions via the Federal eRulemaking Portal
at www.regulations.gov (indicate IRS and
REG-101355-26) by following the online
instructions for submitting comments.
Requests for the public hearing must be
submitted as prescribed in Comments and
Public Hearing in Part V of this preamble.
Once submitted to the Federal eRulemaking Portal, comments cannot be edited or
withdrawn. The Department of the Treasury (Treasury Department) and the IRS
will publish for public availability any comments submitted to the IRS’s public docket.
Send paper submissions to: CC:PA:01:PR
(REG-101355-26), room 5503, Internal
Revenue Service, P.O. Box 7604, Ben
Franklin Station, Washington, DC 20044.
FOR FURTHER INFORMATION
CONTACT: Concerning the proposed
regulations, Jennifer Friedman at (202)
317-5500; concerning submissions of
comments and the public hearing, the
Publications and Regulations Section at
(202) 317-6901 (not toll-free numbers) or
by email at publichearings@irs.gov (preferred).
SUPPLEMENTARY INFORMATION:
I. Authority
This document contains proposed additions to the Income Tax Regulations (26
CFR part 1) to implement sections 128
and 129 of the Internal Revenue Code
(Code).
These proposed regulations are promulgated under section 7805(a) of the
Code, which provides that “the Secretary1
shall prescribe all needful rules and regulations for the enforcement of [the Code],
including all rules and regulations as may
be necessary by reason of any alteration of
law in relation to internal revenue.”

II. Background
A. In General
1. Section 128 Contributions to Trump
Accounts
Section 70204 of Public Law 119-21,
139 Stat. 72 (July 4, 2025), commonly
known as the One, Big, Beautiful Bill Act
(OBBBA), added section 530A regarding Trump accounts to the Code. Section 70204 of the OBBBA also added
section 128 to the Code providing an
exclusion from gross income for employer
contributions to the Trump account of
an employee or of any dependent of an
employee pursuant to a Trump account
contribution program. The provisions
apply to taxable years beginning after
December 31, 2025.
A Trump account is a type of traditional
individual retirement account (IRA) that is
established for the exclusive benefit of an
eligible individual and that is designated
at its establishment as a Trump account.
When a Trump account is opened, the eligible individual is the owner of the Trump
account and is referred to as the account
beneficiary.
A Trump account is subject to certain
special rules inapplicable to other individual retirement arrangements under
section 408.2 The special rules apply only
during the period that begins when the
account beneficiary’s initial Trump account
is established and ends on December 31
of the calendar year in which the account
beneficiary attains age 17 (growth period).
The special rules that apply only during the
growth period include rules regarding contributions, investments, distributions, and
reporting. After the growth period, most of
these special rules cease to apply and the
rules under section 408(a) governing traditional IRAs generally apply.
Section 128(a) provides that an amount
paid by an employer as a contribution to

Section 7701(a)(11)(B) provides that the term “Secretary” means the Secretary of the Treasury or his delegate. Section 7701(a)(12)(A)(i) defines delegate to include any agency of the
Treasury Department, which includes the IRS.
2
Individual retirement arrangements are individual retirement accounts under section 408(a) or individual retirement annuities under section 408(b). The term “individual retirement arrangements” refers to both individual retirement accounts and individual retirement annuities, while the term “IRAs” refers only to individual retirement accounts under section 408(a).
1

Bulletin No. 2026–37

249

September 8, 2026

the Trump account of an employee or of
any dependent of an employee pursuant
to a Trump account contribution program
is excludable from gross income of the
employee.
Section 128(b) provides that the
amount excludable under section 128(a)
with respect to any employee shall not
exceed $2,500 (subject to inflation adjustments after 2027).
Section 128(c) provides that the term
“Trump account contribution program”
means a separate written plan of an
employer for the exclusive benefit of its
employees to provide contributions to the
Trump accounts of such employees or
dependents of such employees that meets
requirements similar to the requirements
of section 129(d)(2), (3), (6), (7), and (8).
2. Section 129 Dependent Care
Assistance Programs
Section 1293 provides that amounts
paid or incurred by an employer for
dependent care assistance provided to
an employee are excludable from the
employee’s gross income if the amounts
are furnished pursuant to a dependent
care assistance program. A dependent
care assistance program is a separate written plan of an employer for the exclusive
benefit of its employees that provides
dependent care assistance and meets certain other requirements under the Code,
including requirements relating to nondiscriminatory benefits, limits on principal
shareholders’ benefits, and information to
be provided to eligible employees.
Dependent care assistance means the
payment or provision of services that
would be considered employment-related
expenses under section 21(b)(2) (relating
to expenses for household and dependent care services necessary for gainful
employment) if paid for by the employee.
Such
employment-related
expenses
include expenses for the care of a qualifying individual. The term “qualifying
individual” is defined as (i) a dependent
of the taxpayer who has not attained age
13 or (ii) a dependent or spouse of the taxpayer who is physically or mentally inca-

pable of caring for himself or herself and
who has the same principal place of abode
as the taxpayer for more than one-half of
the taxable year. The amount that may
be excluded annually from an employee’s gross income under a dependent care
assistance program is limited to $7,500
($3,750 in the case of a married individual
filing a separate return).
A dependent care assistance program
must satisfy four nondiscrimination rules:
(1) the contributions and benefits rule in
section 129(d)(2), (2) the eligibility rule
in section 129(d)(3), (3) the owner concentration rule in section 129(d)(4), and
(4) the average benefits rule in section
129(d)(8). The contributions and benefits rule is satisfied if the contributions
and benefits provided under the plan do
not discriminate in favor of highly compensated employees (HCEs) within the
meaning of section 414(q). The eligibility rule is satisfied if a plan must benefit
employees who qualify under a classification set up by the employer and found
by the Secretary not to be discriminatory
in favor of HCEs or their dependents. The
owner concentration rule is satisfied if no
more than 25 percent of the amounts paid
or incurred by the employer for dependent
care assistance during the year are provided for the class of individuals who are
shareholders or owners (or their spouses
or dependents), each of whom (on any day
of the year) owns more than 5 percent of
the stock or of the capital or profits interest in the employer. The requirements of
the average benefits rule are satisfied if the
average benefits provided to employees
who are not HCEs under all plans of the
employer is at least 55 percent of the average benefits provided to the HCEs under
all plans of the employer. A special rule
applies with respect to benefits provided
through a salary reduction agreement that
allows the plan to disregard employees
whose compensation is less than $25,000.
In applying the eligibility test and
the average benefits test, employees are
excluded if they have not attained age 21
and completed one year of service; or if
they were not included in a dependent care
assistance program and were included in a

unit of employees covered by a collective
bargaining agreement under which dependent care benefits were the subject of good
faith bargaining.
If a dependent care assistance program fails the nondiscrimination rules, the
benefits are not excludable from income
by HCEs, but the benefits are excludable
from income by employees who are not
HCEs.
B. Published Guidance
Notice 2025-68, 2025-52 IRB 856,
informed taxpayers that the Treasury
Department and the IRS intend to propose regulations providing guidance
with respect to Trump accounts. The
notice described guidance expected to be
included in the proposed regulations in
the form of answers to specific questions,
including questions about employer contributions under a Trump account contribution program.
Notice 2025-68, Q&A I-1 states
that section 128 permits an employee
to exclude up to $2,500 per calendar
year, indexed for inflation after 2027,
for employer contributions made under
a Trump account contribution program.
This limit is applied per employee rather
than per dependent, so an employee with
multiple children still has only one aggregate $2,500 exclusion. Q&A I-2 of Notice
2025-68 states that when an employer
makes a section 128 contribution to a
Trump account, it must affirmatively
identify the payment to the trustee of the
Trump account as a section 128 contribution that is excludable from the employee’s income, and the trustee may rely
on that employer-provided information
unless it has contrary knowledge.1 Finally,
Q&A I-3 of Notice 2025-68 states that a
Trump account contribution program may
be offered through salary reduction under
a section 125 cafeteria plan only when the
contribution is made to the Trump account
of the employee’s dependent, not to the
employee’s own Trump account.
Notice 2025-68 included a request for
comments. These proposed regulations
under sections 128 and 129 are informed

Section 129 was originally added to the Code by the Economic Recovery Tax Act of 1981 (Pub. L. 97-34) and has been amended several times.
Note that section 408(h) provides, “For purposes of this title, in the case of a custodial account treated as a trust by reason of the preceding sentence, the custodian of such account shall be
treated as the trustee thereof.”
3
4

September 8, 2026

250

Bulletin No. 2026–37

by the comments received in response to
the notice. The issues raised in the comments are discussed in the Explanation of
Provisions in Part III of this preamble.
III. Explanation of Provisions
A. Section 128 Contributions to Trump
Accounts
Proposed § 1.128-1(h) would define
a section 128 contribution as an amount
paid by an employer to a Trump account
under a Trump account contribution program.
1. Trump account contribution program
Proposed § 1.128-1(j) would define the
term Trump account contribution program
to mean a program governed by a separate
written plan of an employer for the exclusive benefit of its employees to provide
contributions to the Trump accounts of the
employees or their dependents that meets
the requirements of proposed § 1.128-2(b)
through (h), including following the terms
of the written plan, satisfying the nondiscrimination requirements (see Part III.B.
of this preamble), and providing various
notices and certifications. For these purposes, the term Trump account has the
meaning set forth in section 530A(b)(1).
Generally, an arrangement that fails to
satisfy a requirement for a Trump account
contribution program would not be a
Trump account contribution program and,
for this reason, contributions to Trump
accounts under such an arrangement
would not be excludable from employee
income under section 128. However, with
respect to the nondiscrimination requirements at proposed § 1.128-3, a failure to
satisfy the rules would cause the arrangement to fail to be a Trump account contribution program only with respect to
HCEs.
a. Written plan
Proposed § 1.128-2(b) would provide that a Trump account contribution
program must be set forth in a separate
written plan. The written plan must specify—(i) the classes of employees eligible
to participate; (ii) the rules governing
employer contributions, including the

Bulletin No. 2026–37

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 proposed §
1.128-2(d), (f) and (g); (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). Proposed § 1.128-2(c) would
provide that an arrangement is a Trump
account contribution program only if the
employer follows the terms of the written
plan.
b. Reasonable notification
Under section 128(c), a Trump account
contribution program must meet requirements similar to the requirements of section 129(d)(6), which requires reasonable
notification of the availability and terms
of the program to be provided to eligible employees. Accordingly, proposed
§ 1.128-2(f) would provide that all eligible employees must be given reasonable
notification of the availability and terms
of the Trump account contribution program. This rule is intended to ensure that
employees who are eligible to participate
are adequately informed by the employer
about the existence of the program and
the terms governing participation. Providing reasonable notification is also relevant to the operation of the eligibility
rules, because employees cannot have a
meaningful opportunity to receive benefits under the program unless they are
informed by the employer that the program is available and understand its basic
terms. Proposed § 1.128-2(f) does not prescribe content requirements or a particular
method of furnishing the notice.
c. Written statement
Under section 128(c), a Trump account
contribution program must meet requirements similar to the requirements of

251

section 129(d)(7), which requires a plan
to furnish to an employee, on or before
January 31, a written statement showing
the amounts paid or expenses incurred
by the employer in providing dependent
care assistance to the employee during
the previous calendar year. Accordingly,
proposed § 1.128-2(g) would provide that
a written statement showing the amount
of section 128 contributions 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 may be 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 section 128 contributions. The 2026 General Instructions for Forms W-2 and W-3
provide that the employer must report the
amount of section 128 contributions made
to the Trump account of an employee or
dependent of an employee in box 12 of the
Form W-2 with code TA.
d. Certification
Proposed § 1.128-2(d)(1) would provide that a Trump account contribution
program may make contributions only to
a Trump account whose account beneficiary is in his or her growth period, and is
an employee or an employee’s dependent.
Proposed § 1.128-2(d)(2) would provide
that the aggregate amount contributed
with respect to any employee under a
Trump account contribution program may
not exceed the permitted annual limit
specified in proposed § 1.128-2(d)(5).
Proposed § 1.128-2(d)(3) would provide
that contributions that are not permitted
under proposed § 1.128-2(d)(1) or (d)(2)
are not made pursuant to a Trump account
contribution program and thus are not
excludable from income under proposed
§ 1.128-2(a).
Proposed § 1.128-2(d)(4) would allow,
but not require, an employer to rely on
certain employee certifications. The
employee certification must be in writing, in paper or electronic form, and must
include the following representations: (i)
the account beneficiary is the employee
or anticipated to be the dependent of the
employee for that employee’s taxable year

September 8, 2026

during which the contribution is made;
(ii) the beneficiary’s date of birth, which
would allow the employer to determine
whether the beneficiary is in his or her
growth period for the calendar year in
which the contribution is made; and (iii)
no facts are known to the employee that
would make the account beneficiary ineligible to receive a contribution to his or her
Trump account for that calendar year. The
employer may rely on this certification
unless the employer has actual knowledge
that the certification is incorrect.
Proposed § 1.128-2(d)(4) would further provide that 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. For example, the
method may be that the employee provides the employer with a unique identifying number that corresponds to a particular Trump account, which the employer
(or service provider) could then use to verify that the account to which the contribution will be transferred is a valid Trump
account. The Treasury Department and
the IRS are exploring ways in which this
information can be validated in a secure,
electronic way.
e. Employer communication
Proposed § 1.128-2(h) would prescribe
rules regarding employer communications
with a Trump account trustee to which the
employer is making contributions. Proposed § 1.128-2(h)(1) would require an
employer at the time it makes a contribution to a trustee to advise the trustee that
the amount is a section 128 contribution.
If the employer subsequently determines a section 128 contribution not to
be a section 128 contribution, in whole or
in part, proposed § 1.128-2(h)(4) would
require an employer to so notify the trustee
and provide the trustee with the affected
Trump account information, the calendar
year in which the contribution was made,
and the amount determined not to be a
section 128 contribution. The employer
must provide this notice within a reasonable period of time following the date the

September 8, 2026

employer determines that an amount is
not a section 128 contribution. Proposed
§ 1.128-2(h)(4) would deem 21 calendar
days after the determination to be a reasonable period of time as a safe harbor.
The Treasury Department and the IRS
request comments on whether any additional information is needed for this corrective notice requirement.
Proposed § 1.128-2(h)(2) would
require an employer to 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.
Proposed § 1.128-2(h)(3) would allow
a Trump account trustee to rely on an
employer’s notice that an amount is a section 128 contribution until such time that
the trustee receives a corrective notice or
has contrary knowledge.
The Treasury Department and the IRS
propose this rule to ensure that contributions intended to qualify as section 128
contributions are specifically identified
as section 128 contributions when made
and are corrected as necessary, so that the
trustee may properly administer the contribution under the applicable rules governing Trump accounts, including properly
accounting for whether the account beneficiary has basis in such contributions. The
Treasury Department and the IRS recognize that the corrective notice requirement
may be operationally challenging. For this
reason, comments are requested on what
elements in particular will be difficult to
effectuate, and alternative ways to ensure
that basis in Trump accounts may be properly accounted for where section 128 contributions are recharacterized. For example, the Treasury Department and the IRS
ask commenters to consider whether it
would be viable for the employer to furnish a notice to the affected employee that
could be submitted to, and relied upon by,
the trustee of the affected account.
f. Trustee selection
Comments received in response to
Notice 2025-68 requested guidance on
whether an employer may limit the number of trustees of Trump accounts to whom
they will send contributions under a Trump

252

account contribution program. Some commenters explained that allowing such limitations could minimize employer burden
associated with directing contributions to
multiple trustees as Trump accounts are
established or rolled over.
Proposed § 1.128-2(d)(6) would provide that an arrangement is not a Trump
account contribution program if an
employer limits contributions to Trump
accounts held by a particular trustee or
trustees. Allowing for a Trump account
contribution program to restrict the trustee
or trustees would frustrate the purposes
of section 128 and section 530A because,
unlike analogous circumstances involving
health savings accounts, only one Trump
account may exist for a particular beneficiary. If the employer were permitted
to select the trustees into which a section 128 contribution would be made, an
employee whose dependent has a Trump
account with a different trustee would be
precluded from receiving contributions to
the dependent’s Trump account. In addition, in the case of parents working for
different employers, each of whom limits
section 128 contributions to particular, but
different trustees, at least one parent would
be precluded from receiving tax-favored
employer contributions to the dependent’s Trump account. Section 530A(b)
(1)(A)(i), which contemplates the Treasury Department’s role in organizing initial Trump accounts, supports the need
for a rule that addresses systemic account
structure problems that arise because only
one Trump account may exist for a beneficiary. Trump accounts are a distinct statutory arrangement, not merely ordinary
IRAs by another name, and the Treasury
Department’s general rulemaking authority under section 7805 supports issuance
of administrable rules implementing
sections 128 and 530A where the statute
leaves operational gaps. Accordingly, the
proposed regulations would provide that a
Trump account contribution program may
not restrict contributions to a particular
trustee or trustees.
2. Salary reduction
Consistent with Notice 2025-68, proposed § 1.128-2(d)(7) would provide
that a Trump account contribution program may allow an employee to make a

Bulletin No. 2026–37

contribution via salary reduction under a
section 125 cafeteria plan if the contribution is made to the Trump account of the
employee’s dependent but not if the contribution is made to the Trump account of
the employee. Although a Trump account
contribution program would be a qualified benefit under section 125(f)(1), a
contribution under the Trump account
contribution program to a Trump account
of the employee would provide deferred
compensation that is prohibited under section 125(d)(2)(A), because the employee
would have a vested right to compensation that may be payable to that individual
in a later year. In contrast, in the case of
a contribution to the Trump account of a
dependent, the employee cedes dominion
and control over the contributed amount
after the contribution is made, retaining no
future right to receive or assign later distributions from the account. In the case of
a contribution to the account of a dependent, the amount is not a deferral of a right
to compensation because there is no such
future right.
Comments received in response to
Notice 2025-68 that addressed salary
reduction through a section 125 cafeteria
plan generally described it as an important feature because it would let employees
make pre-tax contributions to a dependent’s Trump account, something they
otherwise could not do. Several commenters treated this as a potentially meaningful path to employer adoption. One commenter asked for clarification regarding
whether the elections would be required
before the start of the program year or if
employees could change or revoke their
elections mid-year.
Proposed § 1.128-2(d)(7) would provide that a section 125 cafeteria plan may
permit employees to make prospective
salary reduction elections, or to change or
revoke those elections, at any time during
the plan year, provided the election change
is effective before the salary becomes currently available. Proposed § 1.128-2(d)
(7) would also require that the section 125
cafeteria plan specifically describe the
Trump account program contribution
benefit and permit participants to prospectively change or revoke elections at
least monthly before salary becomes currently available. The Treasury Department
and the IRS propose these regulations to

Bulletin No. 2026–37

facilitate administration of section 128
contributions through section 125 cafeteria plans while ensuring that any election to reduce salary remains prospective
in operation. The Treasury Department
and the IRS intend to amend Treas. Reg.
§ 1.125-4 to incorporate these proposed
rules concerning election changes with
respect to salary reduction for section 128
contributions.
3. Annual limitation
Proposed § 1.128-2(d)(5) would provide that, with respect to any employee,
the total contributions under a Trump
account contribution program for a calendar year may not exceed the lesser of
the amount specified in section 128(b), as
adjusted for inflation under section 128(b)
(2), or the amount specified in the terms of
the program’s written plan.
An individual employee may not
exclude employer contributions under section 128 for that individual’s taxable year
to the extent the aggregate amount of such
contributions from all employers exceeds
the annual limitation under section 128(b).
Specifically, proposed § 1.128-2(d)(5)
would provide that the amount which may
be excluded by an individual with respect
to all Trump account contribution programs for that individual’s taxable year
may not exceed the amount specified in
section 128(b), which is $2,500 for 2026
and 2027 and is adjusted for taxable years
after 2027 as provided in section 128(b)
(2). An employee’s receipt of excess contributions due to participation in Trump
account contribution programs sponsored
by more than one employer will not cause
those programs to fail to be Trump account
contribution programs, provided that each
program prohibits the payment of contributions under that plan with respect to an
employee in excess of the annual limitation.
Several comments received in response
to Notice 2025-68 requested that the Treasury Department and the IRS clarify how
the annual limit for employer contributions
applies in certain scenarios where multiple
employers might make contributions to
the same Trump account or an employee
has multiple children who could receive
contributions to their Trump accounts
under an employer’s Trump account con-

253

tribution program. In response to these
comments, proposed § 1.128-2(d)(5)(ii)
would clarify that the annual limit applies
with respect to each employee so that if an
employee has more than one employer in
a year, the maximum that an employee can
receive from all employers is the amount
specified in section 128(b). Further, as to
employment for a single employer, the
limit applies to the employee rather than
on a dependent-by-dependent basis. If an
employee has more than one dependent
with a Trump account, a program may permit the contribution to be allocated among
those accounts, provided that the aggregate amount an employer contributes with
respect to the employee for the calendar
year does not exceed the annual limit. The
proposed regulations provide examples
clarifying the application of these rules.
A number of major employers have
announced their intention to match the
government’s $1,000 contributions pursuant to the section 6434 Trump accounts
contribution pilot program for eligible
children born in the years 2025 through
2028. Provided that the arrangement otherwise qualifies as a Trump account contribution program under section 128, these
employer contributions would be excludable from employee gross income. Like
other section 128 contributions, the match
contributions would count toward the program’s limit under proposed § 1.128-2(d)
(5) and toward the individual employee’s aggregate limit under section 128(b)
for the taxable year. See Part B.7 of this
Explanation of Provisions for a safe harbor for such match contributions under the
otherwise applicable nondiscrimination
rules that would apply under proposed §
1.128-3.
Proposed § 1.128-2(d)(5)(v) would
provide that an employer has no obligation with respect to compliance with the
section 530A(c)(2) limit. The Treasury
Department and the IRS intend to provide
in a separate notice of proposed rulemaking addressing contributions to a Trump
account that, to the extent that section 128
contributions and other source contributions (such as from the parent, child, relative, etc. but not including pilot program
contributions, qualified general contributions, or qualified rollover contributions)
are made to a Trump account and exceed
the section 530A(c)(2) annual limit,

September 8, 2026

excess contributions will be considered
first to be attributable to the other source
contributions before being attributable to
section 128 contributions. The Treasury
Department and the IRS request comments on specific circumstances in which
the section 128 contributions in addition
to other contributions to a Trump account
may exceed the applicable limit under
section 530A and how such situations can
best be addressed.
The Treasury Department and the IRS
note that an employer may make contributions to a Trump account that are not
section 128 contributions because, for
example, the contribution exceeds the
annual limit for contributions that are
excludable from gross income under a
Trump account contribution program.
Pursuant to section 219(f)(5), amounts
paid by an employer on behalf of an
employee to a Trump account that are not
made under a Trump account contribution
program, including by reason of exceeding the annual limit, are not excludable
from income by virtue of section 128,
and absent some other basis for exclusion, are payments of compensation to
the employee that are includible in his or
her gross income and wages in the taxable
year for which the amounts were contributed and are subject to applicable employment tax reporting and withholding. For
example, if an employer contributes an
additional amount outside of the Trump
account contribution program to a Trump
account, it must treat that amount as gross
income and wages to the employee rather
than as a section 128 contribution. Proposed § 1.128-2(d)(5)(vi)(E) (Example 5)
illustrates this rule.
4. Employer and employee
For an amount to be excludable from
gross income under section 128, it must be
contributed by an employer to the Trump
account of an employee or an employee’s dependent. One comment received in
response to Notice 2025-68 asked Treasury and the IRS to address whether section 128 contributions may be made for
an “owner-employee,” specifically in the
case of partners in a partnership and S corporation shareholders.
5

To address this comment proposed
§ 1.128-1(b) would provide that the
term employee means an individual who
is an employee under the common-law
standard described in § 31.3401(c)1. Therefore, the term employee does
not include a self-employed individual
within the meaning of section 401(c)(1),
such as a partner in a partnership, a sole
proprietor, a director solely by reason
of service as a director, or a 2-percent
shareholder of an S corporation within
the meaning of section 1372(b). A
self-employed individual is not disqualified from maintaining a Trump account
contribution program covering employees of the self-employed individual’s
trade or business, but the self-employed
individual would not be eligible to participate in the program.
This definition is narrower than the definition of employee in section 129 and is
based on differences in the statutory structures of the two provisions. Section 128
does not define the term “employee.”
Accordingly, in the absence of a contrary
statutory indication, that term is interpreted under common-law principles. See
Nationwide Mut. Ins. Co. v. Darden, 503
U.S. 318, 322-24 (1992). Section 129 similarly does not provide a general definition
of employee and thus would also rely on
common law principles. In contrast to section 128, however, section 129(e)(3) states
the term employee includes “an individual
who is an employee within the meaning
of section 401(c)(1) (relating to self-employed individuals).” Section 129(e)(3) is
not among the paragraphs of section 129
that are incorporated into section 128.
Moreover, section 128 does incorporate
three of the four nondiscrimination provisions of section 129(d), omitting only
section 129(d)(4), which tests owner concentration, a rule that is generally unnecessary when self-employed individuals,
including owners in that capacity, are not
eligible for the benefit. Accordingly, the
statutory structure indicates that self-employed individuals were intentionally
excluded from section 128.
Likewise, consistent with the proposed definition of employee, proposed
§ 1.128-1(c) would define employer by
reference to the common-law standard.

The proposed regulations would further
provide that all persons treated as a single
employer under section 414(b), (c), (m),
or (o) are treated as a single employer for
purposes of section 128. Although these
rules are not referenced expressly in section 128, they are implicitly incorporated
into section 128 because the section 129
rules referenced in section 128(c) are subject to them by virtue of section 414(t). As
a result, in adopting rules similar to the
referenced section 129 rules, as section
128(c) directs, it is appropriate to incorporate the same aggregation rules. Accordingly, the proposed regulations would
treat related entities that are members of a
controlled group of corporations, trades or
businesses under common control, or an
affiliated service group, or that otherwise
are required to be aggregated under section 414(o), as one employer in applying
section 128(c). The rules are intended to
function under section 128 in the same
manner as they would under section 129,
including the application of special rules
for separate lines of business under section 414(r).
5. Dependent
Proposed § 1.128-1(a) would define
dependent for purposes of section 128 by
cross-reference to the definition of dependent in section 152.5 Consequently, in the
case of divorced or separated parents, or
married taxpayers filing separately, a child
cannot qualify as a dependent of both parents and only one of the parents can claim
the child as a dependent. See section
152(c)(4) and (e). In the case of a married
couple filing jointly, a child may qualify
as a dependent of both parents for purposes of the exclusion under section 128.
6. Exclusion from gross income
Proposed § 1.128-2(a) would provide
that gross income of an employee does not
include an amount paid by the employer
as a contribution to the Trump account of
the employee or of any dependent of the
employee pursuant to a Trump account
contribution program. Such a contribution may be made via salary reduction, as
explained in Part A.2 of this Explanation

As provided in section 152(a), the definition of dependent in section 152 applies for purposes of subtitle A of the Code, which includes section 128.

September 8, 2026

254

Bulletin No. 2026–37

of Provisions.6 Amounts contributed by
an employer in excess of the section 128
exclusion, or otherwise not meeting the
requirements for exclusion under section 128, would not be excludable from
the employee’s gross income under section 128.
Several comments received in response
to Notice 2025-68 asked for clarification
regarding whether employer contributions under a Trump account contribution
program are wages subject to the Federal Insurance Contributions Act (FICA),
Railroad Retirement Tax Act (RRTA), and
Federal Unemployment Tax Act (FUTA),
as well as Federal income tax withholding requirements. Although section 128
excludes certain employer contributions
from an employee’s gross income for
Federal income tax purposes, that exclusion does not extend to amounts that are
taxed as wages under subtitle C of the
Code. Thus, employer contributions that
are excludable from gross income under
section 128 have no corresponding exclusion from the definitions of wages under
section 3121 (FICA) and section 3306
(FUTA), or compensation under section
3231 (RRTA), and are treated as wages or
compensation for these purposes unless
some other exclusion applies. Although
there is also no express exclusion from the
definition of wages under section 3401 for
section 128 contributions, Federal income
tax withholding generally is intended
to be commensurate with an employee’s income tax liability. Therefore, section 128 contributions that are excludable
from an employee’s income will not be
treated as subject to Federal income tax
withholding. See, e.g., Notice 2001-14,
2001-6 IRB 516.
B. Nondiscrimination Rules
As discussed previously, section 128
provides that Trump account contribution
programs must, among other things, satisfy “requirements similar to the requirements” of certain of the nondiscrimination rules under section 129. In general,
the nondiscrimination rules under proposed §§ 1.128-3 and 1.129-2 are identi-

cal. However, these proposed regulations
would differ with respect to the nondiscrimination rules in situations in which
modifications would better effectuate the
purposes of section 128.
Proposed § 1.129-1 would provide certain definitions related to dependent care
assistance programs. Proposed §§ 1.128-3
and 1.129-2 would clarify the application
of the nondiscrimination rules to Trump
account contribution programs and dependent care assistance programs, respectively.
Comments received in response to
Notice 2025-68 expressed support for
comprehensive section 129 guidance that
provides clear and administrable rules.
Some commenters requested that safe harbors or other interim relief be provided in
order to ensure that uncertainty does not
discourage employers from implementing
Trump account contribution programs.
Commenters also raised unresolved questions about the definition of an HCE, what
it means for “benefits or contributions”
not to discriminate in favor of HCEs, and
how the section 129(d)(3) classification
test should work. They also emphasized
that the 55-percent average benefits test
under section 129(d)(8) has been the subject of confusion for many years and has
been challenging for taxpayers to apply.
Commenters also requested that the Treasury Department and the IRS provide
guidance on opportunities for remediation
and self-correction of contributions that
would otherwise cause a nondiscrimination failure.
1. Definition of HCEs
For purposes of both sections 128 and
129, HCE is defined by cross-reference
to section 414(q). Proposed §§ 1.1281(f) and 1.129-1(a)(7) would define nonhighly compensated employee (NHCE)
to mean an employee who is not an HCE.
These definitions would provide the basic
employee groupings used throughout the
proposed nondiscrimination rules under
both sections 128 and 129. The Treasury
Department and the IRS propose these
regulations to provide an administrable

framework for applying the statutory
requirement that eligibility classifications
not discriminate in favor of HCEs, while
aligning the analysis under sections 128
and 129 with established nondiscrimination principles used in other employee
benefit contexts.
2. Contributions and benefits
Proposed §§ 1.128-3(a) and 1.129-2(a)
would provide parallel rules requiring
that contributions and benefits provided
under the Trump account contribution
program and dependent care assistance
plan, respectively, must not discriminate
in favor of HCEs or their dependents.
These proposed regulations would implement section 129(d)(2) (applied to Trump
account contributions via section 128(c))
through qualitative rules governing the
terms on which contributions are made
available under the program. More specifically, proposed §§ 1.128-3(a) and
1.129-2(a) would provide that a Trump
account contribution program or dependent care assistance program does not
satisfy the nondiscrimination rule for
contributions and benefits if the program
provides more favorable terms for HCEs
than for other employees. These proposed regulations would further provide
that a program satisfies this requirement
if it is designed to provide contributions
and benefits on the same terms for all
employees who are eligible to participate, even if eligible employees receive
different amounts of contributions and
benefits as a result of differing elections
or differing utilization of the contributions and benefits.
3. Eligibility
Proposed §§ 1.128-3(b) and 1.129-2(b)
would address the requirement in sections 128(c) and 129(d)(3), respectively,
that the program benefit employees who
qualify under a classification established
by the employer and found by the Secretary not to be discriminatory in favor
of HCEs or their dependents. Proposed
§§ 1.128-3(b) and 1.129-2(b) would inter-

The Treasury Department and the IRS note that employers may not provide section 128 contributions directly to the employee or employee’s dependent; rather, the contributions must be
made to Trump accounts.
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255

September 8, 2026

pret these provisions as requiring both that
the employer’s eligibility classification be
reasonable and that the classification be
nondiscriminatory in operation.
Accordingly, proposed §§ 1.128-3(b)
(2) and 1.129-2(b)(2) would provide
that an eligibility classification must be,
based on all facts and circumstances,
reasonable and established under objective business criteria that identify the
category of employees who are eligible
under the program. Proposed §§ 1.1283(b)(2) and 1.129-2(b)(2) would clarify
that reasonable classifications generally
include specified job categories, nature of
compensation (salaried or hourly), geographic location, and similar bona fide
business criteria, but that an enumeration of employees by name, or by criteria having substantially the same effect,
is not a reasonable classification. This is
the same standard that is applied under
§ 1.410(b)-4(b).
Proposed §§ 1.128-3(b)(3) and 1.1292(b)(3) would further provide rules for
determining whether an employer’s eligibility classification is nondiscriminatory.
Under the proposed regulations, a classification would be nondiscriminatory for
a plan year only if the group of employees eligible under the program satisfies
either a facts-and-circumstances test or a
numerical safe harbor, both of which are
similar to the nondiscriminatory classification test for qualified plans described in
§ 1.410(b)-4.
Proposed §§ 1.128-3(b)(3)(ii) and
1.129-2(b)(3)(ii) would provide a
facts-and-circumstances test for determining whether an employer’s eligibility
classification is nondiscriminatory. Under
proposed §§ 1.128-3(b)(3) and 1.129-2(b)
(3), a classification would satisfy the eligibility requirement if and only if, based on
all the relevant facts and circumstances,
the Secretary finds that the classification
is nondiscriminatory. Proposed §§ 1.1283(b)(3)(ii) and 1.129-2(b)(3)(ii) would
clarify that no one factor is determinative
and would identify relevant considerations
including the underlying business reason
for the classification, the percentage of
the employer’s employees who are eligible under the plan, whether the eligible
employees under the plan are representative of the employer’s workforce across
salary ranges, and the extent to which the

September 8, 2026

plan’s ratio percentage differs from the
employer’s safe harbor percentage (as
described in the following paragraph). In
general, the greater the business justification for the classification, the broader the
coverage under the plan, the more representative the classification is across salary ranges, and the smaller the difference
between the plan’s ratio percentage and
the employer’s safe harbor percentage, the
more likely the classification is to be nondiscriminatory. The Treasury Department
and the IRS propose these regulations to
provide a flexible but administrable standard for evaluating classifications that
do not satisfy the numerical safe harbor
while ensuring that the classification does
not discriminate in favor of HCEs or their
dependents.
Proposed §§ 1.128-3(b)(3)(iii) and
1.129-2(b)(3)(iii) would provide a safe
harbor under which the classification
would be treated as nondiscriminatory
if the plan’s ratio percentage is greater
than or equal to the safe harbor percentage of the employer. Proposed §§
1.128-3(b)(3)(iii) and 1.129-2(b)(3)(iii)
would define the plan’s ratio percentage
by comparing the percentage of NHCEs
who are eligible under the program to
the percentage of HCEs who are eligible under the program. The proposed
regulations would define the safe harbor percentage of an employer as 90
percent, reduced by 3/4 of a percentage
point for each whole percentage point
by which the NHCE concentration percentage exceeds 60 percent. The NHCE
concentration percentage is the percentage of all the employer’s employees
who are NHCEs. Under this approach,
a classification that satisfies the safe
harbor is treated as nondiscriminatory
without the need to establish, based on
all the relevant facts and circumstances,
that the classification is nondiscriminatory. The Treasury Department and the
IRS propose this safe harbor to provide
employers with certainty and to align the
testing of eligibility classifications with
established nondiscrimination concepts
used in other employee benefit contexts.
See, e.g., § 1.410(b)-4(c)(2) (safe harbor
for nondiscriminatory classification test
under section 410(b)).
As discussed in Part B.6 of this Explanation of Provisions, excluded employees

256

are not taken into account under the eligibility rules in proposed §§ 1.128-3(b) and
1.129-2(b).
4. Owner concentration
Proposed § 1.129-2(c) would provide
rules for applying the owner concentration
limitation in section 129(d)(4). Under that
statutory rule, not more than 25 percent
of the amounts paid or incurred by the
employer for dependent care assistance
during the year may be provided for the
class of individuals who are shareholders
or owners (or their spouses or dependents)
each of whom owns more than 5 percent
of the stock or of the capital or profits
interest in the employer on any day of the
year. Proposed § 1.129-2(c) would restate
this statutory requirement, which imposes
a separate limitation based on ownership
rather than compensation. No similar
owner concentration limitation applies
under section 128, and accordingly the
proposed regulations under section 128
do not include a corresponding rule. However, as discussed in Part A of this Explanation of Provisions, the income exclusion under section 128 is not available to
self-employed individuals. Accordingly,
self-employed individuals in their capacity as such may not participate in a section 128 Trump account contribution program.
5. Average benefits
Proposed §§ 1.128-3(c) and 1.1292(d) would provide rules for applying the
average benefits test under sections 128(c)
and 129(d)(8), respectively. A program
satisfies this statutory test if the average
benefits provided to NHCEs under all
Trump account contribution programs and
dependent care assistance programs of the
employer, respectively, are at least 55 percent of the average benefits provided to
HCEs.
Proposed §§ 1.128-3(c) and 1.1292(d) would provide a framework for
applying this test. In general, the average contributions and benefits provided
to a group of HCEs or NHCEs under all
Trump account contribution programs
or dependent care assistance programs
of the employer, respectively, for a plan
year would equal the total dollar amount

Bulletin No. 2026–37

of such contributions and benefits provided during the plan year to employees
in that group, divided by the number of
employees in that group to whom such
contributions and benefits in a dollar
amount greater than zero are provided
during the plan year, via salary reduction or otherwise. Proposed §§ 1.1283(c) and 1.129-2(d) would further clarify
that, solely for purposes of this calculation, an employee is taken into account
in the denominator only if the employee
is provided contributions and benefits
under a Trump account contribution
program or a dependent care assistance
program of the employer, respectively,
in an amount greater than zero during
the plan year, and that these rules apply
only for purposes of determining compliance with the average benefits test.
Proposed §§ 1.128-3(c) and 1.129-2(d)
would also reflect the statutory rule permitting a program, in the case of contributions and benefits provided through a
salary reduction agreement, to disregard
employees whose compensation is less
than $25,000. Additionally, as discussed
in Part B.6 of this Explanation of Provisions, excluded employees are not taken
into account in the average benefits test.
Proposed §§ 1.128-3(c)(3) and 1.1292(d)(3) would provide parallel timing
rules for applying the average benefits
test. Under proposed §§ 1.128-3(c)(3)
and 1.129-2(d)(3), compliance with the
average benefits test is determined as of
the last day of the plan year, taking into
account any individual employed on
any day of the plan year who is not an
excluded employee and who was provided section 128 contributions or dependent care assistance program benefits, as
applicable, via salary reduction or otherwise, on any day during the plan year.
The Treasury Department and the IRS are
proposing these rules to provide a uniform
testing date and to ensure that the test
takes into account all relevant employees,
rather than only employees employed or
participating at a particular time during
the plan year. The Treasury Department
and the IRS request comments on whether
any additional information would be helpful in applying the average benefits test.

7

6. Excluded employees
Proposed §§ 1.128-3(e) and 1.129-2(f)
would provide rules identifying employees who are excluded from consideration
for purposes of applying specified nondiscrimination requirements. Consistent with
section 129(d)(9),7 proposed §§ 1.1283(e) and 1.129-2(f) would provide that,
for purposes of the eligibility and average
benefits tests, an employer shall exclude
employees who have not attained age 21
and completed one year of service, subject to rules similar to the rules of section 410(b)(4). An employer shall also
exclude employees not included in the
Trump account contribution program or
the dependent care assistance program
who were covered by a collective bargaining agreement if there is evidence that the
relevant benefits were the subject of good
faith bargaining between employee representatives and the employer or employers.
The Treasury Department and the IRS
are proposing these rules to reflect the
statutory exclusions from nondiscrimination testing and to clarify the circumstances in which those employees are
disregarded in applying the eligibility and
average benefits rules. Proposed §§ 1.1283(e) and 1.129-2(f) are generally parallel
in this respect.
7. Pilot match contribution arrangement
safe harbor
Employers have expressed concern that
their announced intentions to match payments made to Trump accounts of dependents of employees pursuant to the section
6434 Trump accounts contribution pilot
program available to account beneficiaries
born in calendar years 2025 through 2028
may cause a plan to fail applicable nondiscrimination requirements. To address
these concerns, proposed § 1.128-3(d)
would provide a safe harbor disregarding these contributions for purposes of
the contribution and benefits requirement
of proposed § 1.128-3(a), and the average benefits percentage requirement of
proposed § 1.128-3(c). The safe harbor
does not apply for purposes of proposed
§ 1.128-3(b).

To be eligible for the safe harbor, an
employer must make contributions under
a pilot match contribution arrangement
designed to provide contributions on
behalf of employees with dependents who
are eligible to receive section 6434 pilot
program contributions to their Trump
accounts. These contributions must be
made available on the same terms and
conditions to all employees who are not
excluded employees. An arrangement will
not fail to be a pilot match contribution
arrangement because the employer adopts
reasonable measures to establish eligibility. Thus, for example, an employer might
determine eligibility based on the age of a
dependent or might alternatively base eligibility on validation of receipt of the pilot
program contribution into an employee’s
dependent’s Trump account. In either
case, the arrangement uses a reasonable
measure to determine eligibility.
If an employer makes pilot match
contributions and also makes other section 128 contributions, via salary reduction or otherwise, the other contributions
must separately satisfy the contribution
and benefits requirement and the average
benefits percentage requirement. In determining whether these requirements are
separately satisfied, the employer may,
but is not required to, disregard the pilot
match contributions.
8. Failure and remediation
Proposed §§ 1.128-3(c)(5) and (g)
and 1.129-2(h) and (j) would provide rules
addressing the effect of a failure to satisfy
the nondiscrimination requirements and
the circumstances in which a program
may take remedial action. In general,
these proposed rules would provide that,
if a program would qualify as a Trump
account contribution program or dependent care assistance program but for a
failure to satisfy one or more of the applicable nondiscrimination requirements, the
program would continue to be treated as
satisfying those requirements with respect
to employees who are NHCEs.
The proposed rules would also provide
a remedial rule for failures of the average
benefits test and, in the case of depen-

Section 129(d)(9) applies for purposes of section 129(d)(3) and (8), which are incorporated by reference into section 128(c).

Bulletin No. 2026–37

257

September 8, 2026

dent care assistance programs, the owner
concentration test. Under proposed §§
1.128-3(c)(5) and 1.129-2(j), if the program fails the average benefits test as of
the last day of the plan year, the program
may nonetheless be treated as satisfying
that requirement if, on or before the deadline for furnishing Form W-2 for the year
in which the benefits were provided, the
employer includes in the gross income of
affected HCEs the amount of excess benefits determined under the proposed regulations. In the case of dependent care assistance programs, proposed § 1.129-2(j)(3)
would provide a similar remedial rule for
excess ownership concentration.
In general, if all HCEs have benefits in
excess of the amount that would satisfy
the 55-percent average benefits threshold,
the excess benefit amount for each HCE is
determined by reference to that threshold.
If not all HCEs have benefits in excess
of that amount, proposed §§ 1.128-3(c)
(5)(ii)(B)(2) and 1.129-2(j)(2)(ii) would
permit the employer to allocate the excess
benefit and required reduction among
HCEs in any reasonable manner, including methods similar to those used under
§ 1.401(k)-2(b)(2)(iii).
A similar allocation of an excess ownership concentration is permitted in the
case of failures to satisfy the ownership
concentration test. In that case, the permitted concentration amount is subtracted
from the benefit provided to participating
principal shareholders or owners (defined
to include their spouses and dependents)
to determine the amount to be included
in income. The permitted concentration
amount is 25 percent of the total dependent
care benefits provided by the employer to
all participants during the year divided
by the number of participating principal
shareholders or owners.
The Treasury Department and the IRS
are proposing these regulations to provide
a practical correction mechanism for failures, while preserving the statutory focus
on preventing HCEs from receiving the
benefit of discriminatory arrangements.
Proposed §§ 1.128-3(c)(5) and 1.129-2(j)
are intended to allow employers to correct
certain failures through income inclusion,
rather than by requiring adjustment of
benefits that have already been provided.
The proposed regulations regarding nondiscrimination remediation rules

September 8, 2026

under sections 128 and 129 are generally
parallel, but there are certain substantive differences between the two. First,
because there is no corresponding ownership concentration test under section 128,
no remediation rule for an ownership
concentration failure is needed under section 128. In contrast, proposed § 1.1292(j) would permit remediation for failures
of either the ownership concentration test
in section 129(d)(4) or the average benefits test in section 129(d)(8). Second, proposed § 1.128-3(c)(5)(ii)(A), through its
cross-reference to § 1.128-2(h)(4), would
require that the Trump account contribution program provide a corrective notice
to advise the trustee that the contribution
is not a section 128 contribution.
C. Applicability Date
These proposed regulations are proposed to apply to plan years beginning on
or after the date final regulations are published in the Federal Register. Taxpayers
may rely on these proposed regulations
for plan years beginning before the date
final regulations are published in the Federal Register.
IV. Special Analyses
Regulatory Planning and Review
Executive Orders 12866 and 13563
direct agencies to assess costs and benefits of available regulatory alternatives
and, if regulation is necessary, to select
regulatory approaches that maximize net
benefits (including potential economic,
environmental, public health and safety
effects, distributive impacts, and equity).
Executive Order 13563 emphasizes the
importance of quantifying both costs and
benefits, reducing costs, harmonizing
rules, and promoting flexibility.
The proposed regulations have been
designated by the Office of Management
and Budget’s (OMB’s) Office of Information and Regulatory Affairs (OIRA)
as subject to review under Executive
Order 12866 pursuant to the Memorandum of Agreement (MOA, July 4, 2025)
between the Treasury Department and
the OMB regarding review of tax regulations. OIRA has determined that the
proposed rulemaking is a significant reg-

258

ulatory action under section 3(f) of Executive Order 12866 and subject to review
under Executive Order 12866 and section
1(b) of the MOA. Accordingly, the proposed regulations have been reviewed by
OMB. This proposed rule is not expected
to be considered a regulatory action under
Executive Order 14192 because it does
not impose any more than de minimis regulatory costs.
Need for Regulation
The proposed regulations would clarify the rules for employer contributions
to Trump accounts under section 128 of
the Internal Revenue Code (Code) and the
rules for nondiscrimination testing under
sections 128 and 129 of the Code.
The Statute and the Proposed Regulations
Public Law 119-21, commonly
referred to as the One, Big, Beautiful
Bill Act (OBBBA), added new sections
530A, 128, and 6434 to the Code. Section
530A describes Trump accounts, section
128 describes certain employer contributions to Trump accounts, and section
6434 describes the Trump accounts contribution pilot program. The proposed
regulations provide guidance on employer
contributions to Trump accounts under
section 128.
Section 530A defines a Trump
account as a traditional individual retirement account (IRA) with some special
rules. Most special rules that distinguish
Trump accounts from other IRAs apply
only during the growth period. The first
day of the growth period is the day the
account is established, and the final day
of the growth period is December 31 of
the calendar year in which the account
beneficiary attains age 17. The rules for
traditional IRAs generally apply after the
growth period. A Trump account may be
established for the benefit of a child prior
to the calendar year in which the child
attains age 18 if the child has been issued
a social security number.
In general, distributions from Trump
accounts are not permitted during the
growth period. The entire balance of a
Trump account may be rolled over in a
direct trustee-to-trustee transfer to a new
Trump account of the account beneficiary.

Bulletin No. 2026–37

The entire balance of a Trump account
may be rolled over in a direct trustee-totrustee transfer to an ABLE account of the
account beneficiary in the calendar year
the account beneficiary attains age 17.
Investments in a Trump account must
track the returns of a broad index of equities in primarily U.S. companies for which
regulated futures contracts are traded,
avoid the use of leverage, and avoid
annual fees and expenses above 0.1 percent. Trump accounts may receive contributions from nonprofits, governments,
employers, and individuals. In general,
contributions to a Trump account are subject to an annual limit of $5,000, adjusted
for inflation.
Governments and nonprofits may make
qualified general contributions through
the Treasury Department, and such contributions must be allocated in equal
amounts to the Trump accounts of every
account beneficiary in a qualified class.
Qualified general contributions from governments and nonprofits through the Treasury Department do not count towards the
$5,000 annual contribution limit.
Section 128 sets rules for certain employer contributions to Trump
accounts. Employers may contribute to
the Trump account of an employee or
an employee’s dependent. Section 128
contributions to a Trump account are
excluded from the employee’s income, up
to an annual limit of $2,500, adjusted for
inflation. Section 128 contributions count
towards the $5,000 annual contribution
limit.
Section 6434 describes the Trump
accounts contribution pilot program. In
the pilot program, the Secretary will pay
$1,000 to the Trump accounts of eligible children. A U.S. citizen born in 2025,
2026, 2027, or 2028 who has been issued
a social security number and for whom no
request for a pilot program contribution
has previously been processed is eligible
for a pilot program contribution. Pilot program contributions do not count towards
the $5,000 annual contribution limit.
All other contributions to a Trump
account, including contributions from
friends or family members, create investment in the contract and count towards the
$5,000 annual contribution limit.
Section 129 describes dependent care
assistance programs. Under section 129,

Bulletin No. 2026–37

an employee may exclude from gross
income employer-provided dependent
care assistance furnished under a qualifying program. To qualify, the program must
satisfy nondiscrimination rules for eligibility and benefits, limit benefits for morethan-5-percent shareholders or owners to
no more than 25 percent of total program
benefits and provide average benefits to
non-highly compensated employees equal
to at least 55 percent of those provided
to highly compensated employees. The
exclusion is generally limited to $7,500,
or $3,750 for married individuals filing
separately, for taxable years beginning
after December 31, 2025.
The proposed regulations are just
one piece of the implementation of section 70204 of OBBBA; prior guidance
addressed the election to open an initial
Trump account and the election to receive
a pilot contribution, and future guidance
will address other Trump account issues.
In addition to addressing issues specific to
Trump accounts, the proposed regulations
also address nondiscrimination testing in
the context of both section 128 Trump
account contribution programs and section
129 dependent care assistance programs.
The proposed regulations would
define various terms for the purposes of
section 128. The proposed regulations
would adopt the common law definitions
of employee and employer for section
128. An implication of these definitions
of employee and employer is that a section 128 contribution cannot be made by
a self-employed individual; a section 128
contribution must be made by an employer
to the Trump account of an employee or
an employee’s dependent. The proposed
regulations define dependent by cross referencing section 152. Other definitions in
the proposed regulations generally adhere
closely to definitions from section 128,
other statutes, or prior regulations.
The proposed regulations would provide rules for Trump account contribution
programs. Trump account contribution
programs would be required to notify eligible employees of the terms of the program, report annually to an employee on
Form W-2 or other written document the
section 128 contributions made for that
employee during the prior calendar year,
verify that the destination of a section 128
contribution is a Trump account, identify

259

a section 128 contribution as such to the
trustee when it is made, and notify the
trustee within a reasonable period (generally, within 21 calendar days) if a contribution previously identified as a section 128
contribution is later determined not to be
a section 128 contribution. Trump account
contribution programs would be permitted to rely on an employee’s certification
of the age of the account beneficiary and
the employee’s relationship to the account
beneficiary. Trump account contribution
programs would not be permitted to limit
contributions to accounts held by one or
more particular trustees.
The proposed regulations would provide rules for the use of section 125 cafeteria plans by Trump account contribution
programs. A Trump account contribution
program would be permitted to allow an
employee to fund a section 128 contribution to a dependent’s Trump account via
salary reduction under a section 125 cafeteria plan. A cafeteria plan that includes
section 128 contributions would be
required to allow an employee to prospectively change or revoke elections at least
monthly.
The proposed regulations would clarify
the statutory limit on section 128 contributions. Section 128 contributions are
generally excludable from the income of
the employee and limited to $2,500 per
year. The $2,500 section 128 contribution limit would apply to each employee,
regardless of how many employers the
employee has and regardless of how many
dependents the employee has. Employer
contributions in excess of $2,500 would
not be excludable from the gross income
of the employee.
The proposed regulations would define
various terms for the purposes of section 129. In contrast to section 128, the
definition of employee for section 129
would include both common law employees and self-employed individuals. For
both section 128 and section 129, the proposed regulations would adopt the definition of HCE in section 414(q).
The proposed regulations would provide nondiscrimination rules for Trump
account contribution programs under section 128 and dependent care assistance
programs under section 129. The proposed regulations would require section
128 and section 129 benefits to be made

September 8, 2026

available on terms that do not discriminate in favor of HCEs or their dependents.
The proposed regulations would require
eligibility classifications to be reasonable, based on objective business criteria, and nondiscriminatory under either a
facts-and-circumstances test or a numerical safe harbor. The facts-and-circumstances test would include consideration
of the business reason for the classification, the percentage of eligible HCEs, and
the percentage of eligible non-HCEs. The
numerical safe harbor would be satisfied
if the percent of non-HCEs eligible is at
least 90 percent as large as the percent of
HCEs eligible, and the 90 percent threshold would be reduced by 3/4 of a percentage point for each whole percentage point
by which the percent of an employer’s
employees who are non-HCEs exceeds 60
percent.
The proposed regulations would clarify that the average benefits test, which
requires that average benefits of nonHCEs be at least 55 percent as large as
average benefits of HCEs, is based exclusively on employees who receive more
than zero benefits during the plan year.
The proposed regulations would exclude
employees under age 21, employees who
have not completed one year of service,
and certain collectively bargained employees from the eligibility and average benefits tests. The proposed regulations would
provide a nondiscrimination testing safe
harbor for section 128 contributions tied
to section 6434 pilot program contributions, if those section 128 contributions

are made available on the same terms and
conditions to all non-excluded employees.
The proposed regulations would generally preserve favorable treatment for nonHCEs after a nondiscrimination failure
and would allow certain average benefits
failures, and section 129 owner concentration failures, to be remediated no later
than the general deadline for W-2 reporting through income inclusion for affected
individuals.
Baseline
The Treasury Department and the IRS
have assessed the benefits and costs of the
proposed regulations relative to a no-action baseline reflecting anticipated Federal income tax-related behavior in the
absence of these proposed regulations.
Affected Entities and Taxpayers
The proposed regulations are expected
to affect 73 million children in 44 million
families and 3 million employers.
Economic Effects of the Proposed
Regulations
The proposed regulations generally
minimize compliance burdens on employers, subject to the access requirements of
taxpayers, operational requirements of
Trump account trustees, and applicable
law. Some employers have announced
intentions to “match” the $1,000 pilot
payments from the U.S. Treasury. The

proposed regulations facilitate the prompt
implementation of that structure by giving
employers a safe harbor from nondiscrimination testing.
In the long run, the most important
aspect of section 128 is likely to be the ability of employers to facilitate pre-tax contributions by their employees. The proposed
regulations clarify how section 128 contributions can be made via salary reduction
through a cafeteria plan. Pre-tax contributions to a Trump account are on par with
pre-tax contributions to other traditional
IRAs, and they are even competitive with
section 529 accounts in the context of family savings for higher education expenses.
Comparisons with other savings vehicles for children are challenging in practice because they involve long time horizons and uncertainty about future income
and tax rates. Nevertheless, an apples-toapples comparison is possible with a clear
question and clear assumptions. If a family saves one dollar of after-tax income
now, how many after-tax dollars will the
child have in 20 years? Table 1 shows
the answers when the after-tax dollar is
saved in a section 529 account, a Trump
account through a pre-tax contribution,
and a Trump account through an aftertax contribution, assuming a 10 percent
annual nominal rate of return, a 27 percent
present marginal tax rate (including a 22
percent federal marginal tax rate and a 5
percent state marginal tax rate), and a 17
percent future marginal tax rate (including
a 12 percent federal marginal tax rate and
a 5 percent state marginal tax rate).

September
8, 2026 do not incorporate the “kiddie
260
Bulletin
These comparisons
tax” in section 1(g) of the Code
or how No. 2026–37

These comparisons do not incorporate
the “kiddie tax” in section 1(g) of the Code
or how financial aid might be impacted
by taking distributions while a child is in
college. Pre-tax contributions to Trump
accounts will not be universally better for
families than contributions to section 529
accounts, but they are competitive.
By minimizing compliance burdens for
employers, the proposed regulations make
widespread adoption of Trump account
contribution programs, including programs that permit pre-tax contributions
through a cafeteria plan, more likely.
Pilot program safe harbor
The proposed regulations would clarify
how to apply the nondiscrimination rules
to section 128 contributions. The proposed
regulations would provide a safe harbor
under which section 128 contributions are
disregarded for purposes of the contributions and benefits rule and average benefits test, but not for purposes of the eligibility rule, if the contributions are tied to
section 6434 pilot program contributions
and made available on the same terms and
conditions to all non-excluded employees.
An alternative would be to provide no
safe harbor, such that employers would be
required to do ordinary nondiscrimination
testing. The same-terms safe harbor gives
employers the legal certainty they need to
implement a match for section 6434 pilot
contributions and is narrow enough to prevent employers from targeting the benefit
to HCEs. Employers will be more likely to
match the pilot contribution as a result of
the safe harbor, which could benefit up to
15 million children expected to be born in
2025 through 2028. With median historical returns, an additional $100 in contributions made by an employer to a newborn
would result in an additional $620 dollars
in the account when the child turns 18.
Many employers offer benefits to support families with children. As of March
2025, 13 percent of civilian employees
had access to childcare, 46 percent had
access to a dependent care flexible spending account, and 85 percent had access to
personal leave, sick leave, or paid family
leave. Using the same-terms safe harbor
makes it more likely that employers will
offer broadly available matches for section 6434 pilot contributions through a

Bulletin No. 2026–37

Trump account contribution program.
However, section 128 contributions that
are tied to section 6434 pilot contributions will be more costly to employers
than section 128 contributions that are
structured as a salary reduction through
a cafeteria plan. Section 128 contributions structured as salary reductions shift
employer costs from one purpose (salaries) to a different purpose (benefits)
without increasing total costs. Section
128 contributions structured as a “match”
to the pilot contribution do not shift costs
from one purpose to another, they simply
increase the employer’s cost of providing
benefits. The extent of adoption will be
limited to employers who are willing to
bear the incremental marginal cost of a
new benefit for employees.
Eligibility classification safe harbor
The proposed regulations would clarify how to apply the eligibility component
of the nondiscrimination rules for section
128 and section 129 benefits. The proposed regulations would provide a safe
harbor under which benefits satisfy the
eligibility test if the percentage of nonhighly compensated employees eligible
for the benefit is at least 90 percent as large
as the percentage of highly compensated
employees eligible for the benefit. The
90 percent threshold would be reduced
by three-fourths of a percentage point for
each whole percentage point by which the
percentage of the employer’s employees
who are non-highly compensated employees exceeds 60 percent. Alternatives
would be to provide a safe harbor with a
different percentage, use a fixed threshold
that does not vary with workforce composition, or provide no safe harbor. The 90
percent threshold is high enough to ensure
that eligibility is broadly available to nonhighly compensated employees and flexible enough to account for employers with
workforces that are heavily composed of
non-highly compensated employees. A
safe harbor gives employers more certainty in designing section 128 and section
129 benefits and reduces the compliance
burden of applying a facts-and-circumstances eligibility test. Facts-and-circumstances tests are generally more costly to
comply with because they are more complicated. Evaluating a multi-pronged test

261

is harder than checking a simple numerical threshold.
The eligibility classification safe harbor makes it more likely that employers
will offer section 128 and section 129
benefits. However, the safe harbor is narrow enough, starting at a threshold of 90
percent, such that employers meeting the
safe harbor would in any case have some
confidence of satisfying the facts-and-circumstances test. The eligibility classification safe harbor is more of a relief from
compliance burdens than a relaxation of
the eligibility component of nondiscrimination testing. The relief from compliance
burdens makes it more likely that employers will offer Trump account contribution
programs and dependent care assistance
programs and reduces the compliance
costs of administering those programs.
Remediation deadline
The proposed regulations would clarify when employers may correct certain
nondiscrimination failures for section 128
and section 129 benefits through income
inclusion for affected individuals. The proposed regulations would provide that certain average benefits failures, and section
129 owner concentration failures, may be
remediated no later than the general deadline for W-2 reporting. Alternatives would
be to require remediation by the end of
the plan year, allow remediation through a
later amended return process, or provide no
remediation deadline. The W-2 reporting
deadline is late enough to give employers
time to identify nondiscrimination failures after year-end and early enough to
ensure that affected amounts are included
in income through the regular annual wage
reporting system. A clear remediation deadline gives employers certainty, preserves
administrability for payroll reporting, and
helps ensure that failed benefits are taxed
to the affected individuals.
Correction periods in other retirement
and tax contexts commonly allow time
for orderly correction rather than requiring immediate action. For example, under
IRS self-correction rules, many significant
retirement plan operational failures may
be corrected before the end of the third
plan year after the year of the failure. The
excise tax rules for prohibited transactions
also distinguish between an initial tax of

September 8, 2026

15 percent of the amount involved and
an additional 100 percent tax if the transaction is not corrected within the taxable
period. Compared with these correction
frameworks, a remediation deadline tied
to the deadline for Form W-2 is relatively
prompt. However, the remedy of including benefits in the income of affected individuals is also relatively straightforward,
so the impact of the remediation deadline
is likely small.
Corrective notice timing
The proposed regulations would clarify
the timing and information reporting obligations for Trump account contribution
programs that make section 128 contributions. The proposed regulations would
require a program to identify a section 128
contribution as such to the trustee when
the contribution is made and to notify the
trustee within a reasonable period (within
21 calendar days is deemed a reasonable
period) if a contribution previously identified as a section 128 contribution is later
determined not to be a section 128 contribution. Alternatives would be to require
immediate notice, provide a longer correction period, or provide no specific deadline. The 21-day deadline is long enough
to give contribution programs time to
identify and process errors and short
enough to allow trustees to maintain accurate account records before errors become
difficult to correct. A clear 21-day deadline
gives trustees timely information, reduces
uncertainty about the tax character of contributions, and supports consistent administration of Trump accounts.
As noted in the previous section, correction periods in other retirement and tax
contexts commonly allow time for orderly
correction rather than requiring immediate
action. Compared with other retirement
and tax correction frameworks, the 21-day
corrective notice requirement is relatively
prompt. However, the circumstances leading to a corrective notice are expected to be
rare, so the impact of the 21-day corrective
notice deadline is expected to be small.
Salary reduction election change
frequency
The proposed regulations would clarify
how cafeteria plan election rules apply to

September 8, 2026

section 128 contributions. The proposed
regulations would require a cafeteria
plan that includes section 128 contributions to allow an employee to prospectively change or revoke elections at least
monthly. Alternatives would be to require
more frequent election changes, allow
less frequent election changes, or provide
no specific frequency rule. The monthly
frequency is frequent enough to give
employees flexibility to adjust section 128
contributions as household budgets and
savings needs change and limited enough
to avoid imposing excessive administrative burdens on employers and payroll
systems. A clear monthly election-change
rule gives employers a workable standard
for plan administration and gives employees meaningful access to adjust section
128 contributions during the plan year.
The impact of requiring a cafeteria plan to
allow changes at least monthly is expected
to be small. The marginal cost to employers of building the capacity for employees
to change elections at least monthly is
likely to be a one-time cost. Most cafeteria
plans already have this capacity for HSA
and section 401(k) contributions because
the proposed timing rule is similar to the
timing rules for HSA and section 401(k)
contributions, and Treasury and the IRS
expect most employees to rarely change
their contributions within a plan year.
Statement of contributions by W-2
The proposed regulations would clarify how Trump account contribution programs must notify employees of section
128 contributions made for them during
the prior calendar year. The proposed regulations would allow the annual notice
requirement to be satisfied on Form W-2
or another written document. Alternatives
would be to require a separate stand-alone
notice, prescribe a specific Treasury or
IRS form, or require reporting only on
Form W-2. Allowing Form W-2 reporting
is flexible enough to let employers use
an existing wage reporting process and
specific enough to ensure that employees
receive annual information about section
128 contributions in a familiar year-end
document. A Form W-2 option reduces
compliance costs for employers, limits
duplicative reporting, and helps employees identify section 128 contributions

262

when preparing their tax returns. Allowing
the statement of contributions requirement
to be satisfied by Form W-2 is expected to
minimize compliance burdens.
Summary
Based on the available models and
data, the Treasury Department and the
IRS estimate that the proposed regulations would minimize compliance burdens and make employers more likely
to create Trump account contribution
programs, including programs that allow
employees to fund pre-tax contributions
to Trump accounts. The Treasury Department and the IRS invite public comments
and additional data on the economic
effects that would result from these proposed regulations.
Paperwork Reduction Act
The collection of information contained in this notice of proposed rulemaking will be submitted, under approval
number 1545-NEW, to the Office of Management and Budget in accordance with
the Paperwork Reduction Act of 1995 (44
U.S.C. 3507(d)). Comments on the collection of information should be sent to the
Office of Management and Budget, Attn:
Desk Officer for the Department of the
Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503,
with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer,
C:DC:TS:CAR:MP:T:M:S, Washington,
DC 20224. Comments on the collection of
information should be received by October 13, 2026. Comments are specifically
requested concerning:
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the IRS,
including whether the information will
have practical utility;
The accuracy of the estimated burden
associated with the proposed collection of
information;
How the quality, utility, and clarity of
the information to be collected may be
enhanced;
How the burden of complying with
the proposed collection of information
may be minimized, including through the
application of automated collection tech-

Bulletin No. 2026–37

niques or other forms of information technology; and
Estimates of capital or start-up costs
and costs of operation, maintenance, and
purchase of services to provide information.
The collection of information in this
proposed regulation is in §§ 1.128-2,
1.128-3, 1.129-1, and 1.129-2. This information is necessary to provide guidance
with respect to employer contributions to
Trump accounts and the nondiscrimination rules for dependent care assistance
programs. The collection of information
is required to comply with the provisions
of section 70204 of the OBBBA. The
likely respondents are employers maintaining a Trump account contribution
program or a dependent care assistance
program.
The estimated number of respondents
is 217,000.
The estimated average annual burden
per respondent varies from 2 to 14 hours,
depending on individual circumstances,
with an estimated average of 8 hours.
The estimated total annual reporting
burden is 1,736,000 hours.
The estimated frequency of responses
is annually.
An agency may not conduct or sponsor,
and a person is not required to respond to
a collection of information unless it displays a valid control number assigned by
the Office of Management and Budget.
Regulatory Flexibility Act
The Secretary of the Treasury certifies that these proposed regulations will
not have a significant economic impact
on a substantial number of small entities
pursuant to the Regulatory Flexibility
Act (5 U.S.C. chapter 6). This certification is based on the fact that these proposed regulations would not impose significant reporting requirements on small
entities.
These proposed regulations would
apply to employers maintaining a Trump
account contribution program under
section 128 or a dependent care assistance program under section 129. For
purposes of section 128, these proposed
regulations would include requirements
related to a written plan, employee certifications, section 125 cafeteria plan

Bulletin No. 2026–37

elections (if applicable), notifications
to employees, statements of contributions, employer-to-trustee communications, corrective notices (if applicable),
and nondiscrimination requirements.
It is estimated that the written plan
requirement would take no more than
three hours to complete, the nondiscrimination requirements would take
no more than two hours to complete,
and the other requirements would take
no more than one hour to complete. For
purposes of section 129, these proposed
regulations would not impose any new
requirements on small entities but rather
provide clarifications to assist employers in satisfying existing requirements
under the statute, including requirements for a written plan and nondiscrimination requirements. It is estimated
that the written plan requirement would
take no more than three hours to complete, if a written plan has not already
been adopted, and the nondiscrimination
requirements would take no more than
two hours to complete and are largely
already performed by employers with
dependent care assistance programs.
The Treasury Department and the IRS
also expect that Trump account contribution programs and dependent care assistance programs are primarily maintained
by large employers, given that small
employers are less likely to adopt these
programs. Small employers that do adopt
these programs may be more likely to use
third-party administrators to satisfy any
reporting requirements.
For these reasons, these proposed regulations are unlikely to impact a substantial
number of small entities and any economic
impact to small entities is expected to be
insignificant. Therefore, a Regulatory
Flexibility Act analysis is not required.
Notwithstanding this certification, the
Treasury Department and the IRS invite
comments on the impacts these proposed
regulations may have on small entities.
Section 7805(f)
Pursuant to section 7805(f) of the
Code, this notice of proposed rulemaking
will be submitted to the Chief Counsel for
Advocacy of the Small Business Administration for comment on its impact on small
business.

263

Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates
Reform Act of 1995 (UMRA) requires
that agencies assess anticipated costs and
benefits and take certain other actions
before issuing a final rule that includes
any Federal mandate that may result in
expenditures in any one year by a State,
local, or Tribal government, in the aggregate, or by the private sector, of $100
million (updated annually for inflation).
This proposed rule does not include any
Federal mandate that may result in expenditures by State, local, or Tribal governments, or by the private sector in excess of
that threshold.
Executive Order 13132: Federalism
Executive Order 13132 (Federalism)
prohibits an agency from publishing any
rule that has federalism implications if
the rule either imposes substantial, direct
compliance costs on State and local governments, and is not required by statute,
or preempts State law, unless the agency
meets the consultation and funding
requirements of section 6 of the Executive order. These proposed regulations do
not have federalism implications and do
not impose substantial direct compliance
costs on State and local governments or
preempt State law within the meaning of
the Executive order.
V. Comments and Public Hearing
Before these proposed amendments to
the regulations are adopted as final regulations, consideration will be given to any
comments that are submitted timely to the
IRS as prescribed in the preamble under
the ADDRESSES section. The Treasury
Department and the IRS request comments on all aspects of the proposed regulations. Any comments submitted will be
made available at www.regulations.gov or
upon request. Once submitted to the Federal eRulemaking Portal, comments cannot be edited or withdrawn.
A public hearing is being held on October 15, 2026, beginning at 10 a.m. ET, in
the Auditorium at the Internal Revenue
Building, 1111 Constitution Avenue, N.W.,
Washington, DC. Due to building security
procedures, visitors must enter at the Con-

September 8, 2026

stitution Avenue entrance. In addition, all
visitors must present photo identification
to enter the building. Because of access
restrictions, visitors will not be admitted
beyond the immediate entrance area more
than 30 minutes before the hearing starts.
Participants may alternatively attend the
public hearing by telephone.
The public hearing will be conducted
according to the procedures set out in
26 CFR 601.601(a)(2) and (3). Persons
who wish to testify at the hearing must
submit written or electronic comments
and an outline of the topics to be discussed
as well as the time to be devoted to each
topic by September 25, 2026. A period
of ten minutes will be allocated to each
person for making comments. After the
deadline for receiving outlines has passed,
the IRS will prepare an agenda containing
the schedule of speakers. Copies of the
agenda will be made available at www.
regulations.gov, search IRS and REG101355-26. Copies of the agenda will
also be available by emailing a request
to publichearings@irs.gov. Please put
“REG-101355-26 Agenda Request” in
the subject line of the email. Copies of the
agenda will be available free of charge at
the hearing. If no outlines of the topics to
be discussed at the hearing are received
by September 25, 2026, the public hearing
will be cancelled. If the public hearing is
cancelled, a notice of cancellation of the
hearing will be published in the Federal
Register.
Individuals who want to testify in person at the public hearing must send an
email to publichearings@irs.gov to have
their name added to the building access
list. The subject line of the email must
contain the regulation number (REG101355-26) and the language TESTIFY
In Person. For example, the subject line
may say: Request to TESTIFY in Person
at Hearing for REG-101355-26.
Individuals who want to testify by
telephone at the public hearing must send
an email to publichearings@irs.gov to
receive the telephone number and access
code for the hearing. The subject line
of the email must contain the regulation
number REG-101355-26 and the language
TESTIFY Telephonically. For example,
the subject line may say: Request to TESTIFY Telephonically at Hearing for REG101355-26.

September 8, 2026

Individuals who want to attend the
public hearing in person without testifying must also send an email to publichearings@irs.gov to have the individual’s
name added to the building access list.
The subject line of the email must contain the regulation number REG-10135526 and the language ATTEND In Person.
For example, the subject line may say:
Request to ATTEND Hearing In Person
for REG-101355-26. Requests to attend
the public hearing must be received by 5
p.m. ET on October 13, 2026.
Individuals who want to attend the
public hearing by telephone without testifying must also send an email to publichearings@irs.gov to receive the telephone number and access code for the
hearing. The subject line of the email
must contain the regulation number REG101355-26 and the language ATTEND
Telephonically. For example, the subject
line may say: Request to ATTEND Hearing Telephonically for REG-101355-26.
Requests to attend the public hearing must
be received by 5 p.m. ET on October 13,
2026.
Any questions regarding speaking at
or attending the public hearing may also
be emailed to publichearings@irs.gov.
Hearings will be made accessible to people with disabilities. To request special
assistance during a hearing please contact
the Publications and Regulations Section
of the Office of Associate Chief Counsel
(Procedure and Administration) by sending an email to publichearings@irs.gov
(preferred) or by telephone at (202) 3176901 (not a toll-free number) by October
9, 2026.
VI. Statement of Availability of IRS
Documents
Guidance cited in this preamble is published in the Internal Revenue Bulletin
and is available from the Superintendent
of Documents, U.S. Government Publishing Office, Washington, DC 20402, or by
visiting the IRS website at https://www.
irs.gov.
VII. Drafting Information
The principal author of these proposed regulations is the Office of Associate Chief Counsel (Employee Benefits,

264

Exempt Organizations, and Employment
Taxes). Personnel from the Treasury
Department and the IRS also participated
in their development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Proposed Amendments to the
Regulations
Accordingly, the Treasury Department
and the IRS propose to amend 26 CFR
part 1 as follows:
PART 1—INCOME TAXES
Paragraph 1. The authority citation
for part 1 continues to read in part as follows:
Authority: 26 U.S.C. 7805 * * *
*****
Par. 2. Sections 1.128-1 through
1.129-2 are added to read as follows:
*****
Sec.
1.128-1 Trump account contribution program; definitions.
1.128-2 Trump account contribution program; in general.
1.128-3 Nondiscrimination requirements.
1.129-1 Dependent care assistance programs.
1.129-2 Nondiscrimination requirements.
*****
§ 1.128-1 Trump account contribution
program; definitions.
Definitions. For purposes of section 128 and this section and §§ 1.128-2
and 1.128-3—
(a) Dependent. The term dependent
means an individual who, for the calendar
year in which the contribution is made,
the employee anticipates will be a dependent of the employee under section 152.
In the case of a married couple filing a
joint return, an individual is treated as the
dependent of both individuals filing the
joint return.
(b) Employee—(1) In general. The
term employee means an individual who
is an employee under the common-law

Bulletin No. 2026–37

standard described in § 31.3401(c)-1 of
this chapter.
(2) Self-employed individuals not
treated as employees. The term employee
does not include a self-employed individual within the meaning of section 401(c)
(1). A self-employed individual may
maintain a Trump account contribution
program covering the employees of the
self-employed individual’s trade or business, but the self-employed individual
may not participate in the program.
(c) Employer. The term employer
means the person that is the employer
of an employee under the common-law
standard described in § 31.3401(c)-1 of
this chapter. If the employer is a member
of a group of employers that are treated
as a single employer under the rules of
section 414(b), (c), (m), or (o), then all
employers in that group will be treated as
a single employer for purposes of section
128. The rules of section 414 shall apply
with respect to a Trump account contribution program in the same manner as
they would with respect to a dependent
care assistance program under section
129.
(d) Growth period. The term growth
period means, with respect to an account
beneficiary, the period that begins when
the initial Trump account is established
and ends on December 31 of the calendar year in which the account beneficiary
attains age 17. For example, a child born
on October 1, 2025, would attain age 17
on October 1, 2042, and the last day of
the growth period with respect to the child
would be December 31, 2042.
(e) Highly compensated employee.
The term highly compensated employee
or HCE has the meaning set forth in section 414(q).
(f) Non-highly compensated employee.
The term non-highly compensated
employee or NHCE means an employee
who is not a highly compensated
employee.
(g) Plan year. The term plan year
means the 12-month period on the basis
of which the Trump account contribution
program is administered or, if shorter, the
period for which the program is maintained.
(h) Section 128 contribution. The term
section 128 contribution means a contribution made by an employer to a Trump

Bulletin No. 2026–37

account under a Trump account contribution program.
(i) Trump account. The term Trump
account has the meaning set forth in section 530A(b)(1).
(j) Trump account contribution program. The term Trump account contribution program means a separate written
plan of an employer for the exclusive
benefit of its employees to provide contributions to the Trump accounts of the
employees or their dependents that meets
the requirements of § 1.128-2(b) through
(h).
(k) Applicability date. This section
applies to plan years beginning on or after
the date of publication of the final rule in
the Federal Register.
§ 1.128-2 Trump account contribution
program; in general.
(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

265

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;

September 8, 2026

(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

September 8, 2026

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

266

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 un

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A81c8ca1d8c100480. Public record. Not legal advice.