Notice 2025-68 provides initial guidance on Trump accounts

The Treasury Department and the IRS issued Notice 2025-68 to outline early guidance for Trump accounts, a new tax-favored savings vehicle for children, created under the One Big Beautiful Bill Act (OBBBA). The notice outlines rules that taxpayers may rely on until formal regulations are issued and explains how these accounts are intended to function beginning with tax years starting after Dec. 31, 2025.

Account eligibility and establishment requirements

A Trump account may be opened only for an “eligible individual;” to qualify, the child must be under age 18 at the end of the calendar year in which the creation election is made and must have a Social Security number issued before the election. An authorized person such as a parent, legal guardian, adult sibling or grandparent, must make the account creation election using Form 4547, Trump Account Election(s), or an electronic method once available. If the election is not made at the same time as the pilot-program election, those authorized persons apply in that order of priority. Also note that Form 4547 is currently in draft form and pending final review. The account must be designated as a Trump account when created, meaning an existing IRA cannot be converted into one; you can’t just re-label an existing traditional/Roth/SIMPLE IRA as a Trump account.

Contribution rules during the growth period

A one-time $1,000 federal pilot program contribution is available for children born after Dec. 31, 2024, and before Jan. 1, 2029. States, tribal governments, the District of Columbia, the United States and qualifying §501(c)(3) organizations may make qualified general contributions for designated groups of children. Employers may contribute under §128, allowing a parent’s employer to fund the account. Employer contributions are limited to $2,500 per year (indexed after 2027) and count toward the $5,000 aggregate annual limit during the growth period. Qualified rollovers between Trump accounts are also allowed. 

The “growth period” is the period before Jan. 1 of the calendar year in which the account beneficiary attains age 18. For example, for a child turning 18 on Oct. 1, 2043, the growth period ends Dec. 31, 2042. Individuals, including parents, guardians, relatives and others, may make personal contributions, subject to an aggregate annual limit of $5,000 per beneficiary, during the growth period. During this time, contribution rules differ from those for traditional IRAs. This limit is indexed for inflation for taxable years beginning after 2027. Pilot program contributions, qualified general contributions and §128 employer contributions are excluded from income and do not create basis. Qualified rollovers are not includible in income, but do carry over any basis from the prior Trump account. No contributions of any type may be made before July 4, 2026.

Investment restrictions for minors

During the growth period, investments are limited to “eligible investments.” These include diversified, low-cost, passively managed funds that track broad U.S. stock indexes, such as the S&P 500. Expense ratios may not exceed 0.1 percent, and investments using leverage are prohibited. Derivatives are permitted only to the extent they are used to replicate the index without creating leverage. These limits are designed to protect minors from high-risk investment strategies and promote steady long-term growth.

Distributions before age 18

In most cases, distributions during the growth period are not allowed. Exceptions include qualified rollovers, qualified ABLE rollover contributions, distributions after the beneficiary’s death and return of excess contributions. Without one of these exceptions, funds must remain in the account until Jan. 1 of the calendar year the child turns 18. This restriction reflects the program’s purpose of building long-term savings rather than providing flexible early-access funds.

After the growth period ends

When the beneficiary reaches age 18, the Trump account transitions to rules similar to those for traditional IRAs under §408. The account remains classified as a Trump account, but after the growth period, the special Trump account contribution and distribution restrictions generally no longer apply; the account can never receive SEP or SIMPLE contributions. Distributions become subject to general IRA tax rules and potential early withdrawal penalties unless an exception applies. As a result, after the growth period, the account operates largely as a traditional retirement savings vehicle.

Purpose and design features of Trump accounts

According to the IRS announcement, Trump accounts are intended to support long-term financial growth for minors by allowing contributions and investment earnings to accumulate tax-deferred over many years. However, the program includes significant restrictions, incorporated to encourage long-term savings for the children. Limited investment choices, annual contribution caps, withdrawal limits, and trustee compliance requirements generally make the accounts more rigid than other savings vehicles, such as §529 plans or custodial accounts. These constraints create a disciplined structure but may not meet every family’s planning needs.

Future guidance and implementation timeline

The IRS is requesting comments on several outstanding issues, including trustee requirements, documentation standards, interaction with other tax-advantaged accounts, employer contribution processes and rollover procedures. Form 4547 will serve as a primary method for making account elections, including elections related to the pilot program contribution. An electronic method may also be available soon. The statutory Trump account provisions apply for tax years beginning after Dec. 31, 2025, and the Treasury and the IRS have indicated that proposed regulations are forthcoming.

What to consider now

Practitioners should help clients evaluate whether Trump accounts support their long-term savings goals and how these accounts interact with existing financial tools. Although Notice 2025-68 does not finalize the rules, it provides essential guidance that taxpayers may rely on during the initial implementation phase. As the Treasury and the IRS develop full regulations, tax professionals will play a key role in educating families and integrating Trump accounts into broader savings strategies.