section 129

Employers may get more flexibility under proposed regulations the IRS issued on August 11, 2026, addressing dependent care assistance programs and employer Trump account contribution programs. The proposed rules implement provisions of Public Law 119-21 (commonly known as the One, Big, Beautiful Bill Act), which created Trump accounts and Trump account contribution programs.

The key takeaways: average-benefits testing may become easier; Trump account contributions remain subject to FICA and FUTA taxes; employers may rely on some employee certifications in administering the porgrams; and written plan, notice, and reporting procedures will matter.

The IRS proposal follows earlier Department of Labor guidance in Technical Release 2026-02. DOL generally concluded that neither Trump accounts nor employer contribution programs are “employee pension benefit plans” covered by Title I of ERISA, which may make some employers more comfortable adopting the programs.

Continue Reading IRS Issues Proposed Regulations on Dependent Care Assistance Programs and Trump Accounts

On March 10, 2021, the House passed the fifth major COVID-relief legislation, the American Rescue Plan Act (the “Act”), which it originally passed last week before its amendment and passage by the Senate on March 6.  President Biden is expected to sign the Act on Friday, March 12, 2021.

The Act adopts a new payroll tax credit that is similar to the employee retention credit, which was originally enacted as part of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and amended by the Consolidated Appropriations Act, 2021 (the “CAA”).  The new credit will be in effect from July 1, 2021, through December 31, 2021.  In addition, the Act significantly increases the exclusion for employer-provided dependent care assistance for 2021, and makes prospective changes to extend the availability of paid leave credits similar to those originally adopted as part of the Families First Coronavirus Response Act (the “FFCRA”) and that are set to expire on March 31.  Finally, the Act will extend the deduction limitation under section 162(m) to additional employees.
Continue Reading American Rescue Plan Act Goes to Biden for Signature: Includes Changes to Employee Retention Tax Credit, Employer-Provided Dependent Care, Paid Leave Credits, and Deduction Limitations for Executive Compensation