Section 530A Account Update: ERISA Status of Trump Accounts

The Department of Labor has issued important guidance addressing whether employer programs that permit contributions to Section 530A accounts (and the Section 530A accounts themselves) are treated as “employee pension benefit plans” under Title I of ERISA. In Technical Release 2026-02, the Department of Labor concluded that Section 530A accounts and employer-run contribution programs generally will not be ERISA-covered pension plans, provided employers structure their involvement carefully and maintain neutrality.

We previously posted about Section 530A accounts and how employers can set up contribution programs to fund them. On August 11, 2026, the IRS issued proposed regulations providing further guidance to employers that choose to make contributions to Section 530A accounts for employees or their dependents. On August 20, 2026, the IRS issued proposed regulations providing guidance regarding eligible investments that may be invested in Section 530A accounts during the growth period.

This follow-up post summarizes the key points from the DOL’s guidance, including what conditions must be met to avoid creating an ERISA pension plan, when ERISA concerns may arise, and how payroll deduction arrangements should be handled. This post does not cover the IRS proposed regulations, the most important aspects of which – details about non-discrimination testing for Trump accounts and dependent care assistance accounts – are addressed in our post here.

Most Trump Accounts Are Not ERISA Pension Plans

ERISA defines an “employee pension benefit plan” as a plan, fund, or program established or maintained by an employer that, by its express terms or as a result of surrounding circumstances, provides retirement income to employees or results in the deferral of income by employees for periods extending to termination of employment or beyond.

The DOL’s analysis of the ERISA status of Section 530A accounts turns on that statutory framework. Most Section 530A accounts are established for the benefit of employees’ dependents, not for the employees themselves. Because those accounts are designed to provide tax-advantaged savings for children rather than benefits to the employees themselves, the DOL concluded that the accounts, and the Trump account contribution programs associated with them, generally do not meet ERISA’s definition of a pension plan.[1] Accounts for employees themselves are discussed under “Special Case” below.

Do Employer Contributions Affect ERISA Status?

Under Code Section 128, employers may make contributions to Section 530A accounts during the so-called “growth period,” before the beneficiary of the account turns 18. Employer contributions to Section 530A accounts established for employees’ dependent children generally do not create ERISA-covered pension plans, even where the employer contributes directly or facilitates contributions through a cafeteria plan using employee salary reduction contributions to those accounts.

That conclusion is particularly important for employers considering whether to offer Section 530A account contributions as a benefit to their employees through a Trump account contribution program. The DOL guidance reduces a major compliance concern by confirming that employer funding standing alone is not necessarily enough to convert the arrangement into an ERISA pension plan where the account is for a dependent child and the employer’s role remains limited.

Even so, the DOL’s reasoning depends heavily on employer neutrality and the fact that employers do not control account establishment, investments, distributions, or other core account features. Exercising control over Section 530A accounts may cause the Trump account contribution program to be treated as an ERISA pension plan.

Special Case: Accounts for the Benefit of the Employee

The ERISA analysis becomes more nuanced when the Section 530A account beneficiary is the employee (for example, a 16- or 17-year-old employee who is still within the account’s growth period).

Technical Release 2026-02 provides that employer contributions to a Section 530A account for the benefit of an employee during the growth period generally will not create an ERISA-covered plan if participation is completely voluntary and the employer does not:

1. Impose conditions on the use of Section 530A account funds beyond those permitted by the Internal Revenue Code;
2. Make or influence investment decisions;
3. Represent that the Section 530A account or related contribution program is established or maintained by the employer; or
4. Receive compensation in connection with the Section 530A account.

These conditions effectively require employers to take a hands-off approach. Employers may facilitate employee contributions and make additional employer contributions, but they should not condition benefits, steer investments, or communicate in a way that suggests the arrangement is an employer-maintained retirement program. The proposed regulations provide that an arrangement will not be considered a Trump account contribution program if an employer limits contributions to Section 530A accounts held by a particular trustee, because only one Section 530A account may exist for a particular beneficiary.

Payroll Deduction Contributions

The DOL finds it likely that some employers will be willing to allow payroll deduction programs that the employer has established for IRAs to be used by employees who have established their own Section 530A accounts during the growth period. Employers may allow employees to make after-tax payroll deduction contributions to their own Section 530A accounts during and after the growth period. Employees cannot fund contributions to their own 530A accounts through a cafeteria plan.  Where no employer contributions are made, the IRA payroll deduction safe harbor will apply if the arrangement satisfies all IRS safe harbor conditions.[2] 

When ERISA Concerns May Arise

Although the DOL’s guidance is employer-friendly, it does not provide unlimited protection. A Section 530A account or related contribution program may raise ERISA concerns if the arrangement provides retirement income to employees (which seems unlikely to be true) or if the employer’s involvement goes beyond facilitation of contributions.

Employers should be especially careful not to endorse a particular provider, influence investment decisions, impose conditions on account use, characterize the account as an employer-maintained benefit plan, or receive compensation beyond limited reimbursement for administrative costs. Those actions could undermine the DOL’s neutrality-based analysis and create avoidable ERISA risk.

Conclusion

Technical Release 2026-02 provides welcome clarity for employers considering whether to support Section 530A accounts for employees’ children. The central message is that Section 530A accounts and related Section 128 contribution programs generally should not be treated as ERISA pension plans where the accounts are for dependents, and the employer maintains a neutral, administrative role.

At the same time, employers should not treat the guidance as a blanket exemption. ERISA status remains sensitive to how the program is designed, communicated, and administered. Employers that wish to contribute to Section 530A accounts or facilitate contributions should build their programs around voluntariness, neutrality, and limited employer involvement, while continuing to monitor future Treasury and IRS guidance on tax administration.

If you have questions about how employers can offer Section 530A account benefits, please contact Kaitlyn Malkin or any member of Verrill’s Employee Benefits & Executive Compensation Group.

[1] Although not directly addressed in Technical Release 2026-02, Section 530A accounts and employer-contribution programs also would not constitute an ERISA welfare benefit plan. The regulation defining “welfare plan” for purposes of ERISA provides a list of the types of benefits that constitute ERISA welfare benefits, and a Section 530A account does not fit within any of the categories. In fact, the example provided in the regulations of a benefit that is not an ERISA welfare benefit is “a system of payroll deductions by an employer for deposit in savings accounts owned by its employees.”

[2] The IRA payroll deduction safe harbor requires the following conditions for the program not to be considered a pension plan: (1) there are no employer contributions; (2) employee participation is voluntary; (3) the employer does not endorse the program; and (4) the employer receives no consideration in connection with the program.