Proposed rules expand Trump Account investment guidance

Proposed regulations clarify eligible investments

Update: On Aug. 21, 2026, the Treasury Department and IRS published proposed regulations that build on Notice 2025-68 by clarifying how Trump Account trustees would determine and monitor eligible investments. During the beneficiary’s growth period, investments generally would remain limited to mutual funds or exchange-traded funds (ETFs) that track qualified indexes. A qualifying fund could not use leverage that materially increases risk, and its annual fees and expenses could not exceed 0.1%. The proposed rules also require trustees to establish default eligible investments and monitor whether funds continue to qualify. If a fund becomes ineligible during the growth period, the account generally has 30 days to dispose of it before losing its Trump Account and IRA status.

For preparers advising families, the practical message is that the investment menu is intentionally narrow to keep costs low and preserve more of a child’s returns for long-term growth. The restrictions end after Dec. 31 of the year the beneficiary turns 17, when traditional IRA rules generally take over. Comments on the proposed regulations are due Oct. 20, 2026.

Trump Account rules at a glance

The Treasury Department and IRS previously issued Notice 2025-68 outlining how Trump Accounts generally operate. The following rules provide context for the newly proposed investment requirements.

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 individual may elect to open a Trump Account for an eligible child by submitting Form 4547, Trump Account Election(s). The form may be submitted through the Trump Accounts app or an IRS Individual Account. It may also be filed with an electronically filed federal income tax return.

If only the account-opening election is made, the authorized individual is the child’s legal guardian, parent, adult sibling or grandparent, in that order of priority. The account must be designated as a Trump account when created, meaning an existing IRA cannot be converted into one. An existing traditional, Roth, SEP or SIMPLE IRA cannot simply be relabeled 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 carry over any basis from the prior Trump account. Contributions may be made beginning July 4, 2026.

Investment restrictions for minors

During the growth period, investments are limited to “eligible investments.” These generally include low-cost mutual funds or ETFs that track qualified broad U.S. equity indexes, such as the S&P 500. Annual fees and expenses may not exceed 0.1%. A fund may use borrowing or derivatives provided the strategy does not materially increase the investment’s risk of loss. These limits are intended to protect minors from high-risk investment strategies while promoting 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 returns 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 to funds.

After the growth period ends

After the growth period ends, the Trump account transitions to rules similar to those for traditional IRAs under §408. The account remains classified as a Trump account, but 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 designed to encourage long-term savings for 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.

What to consider now

Practitioners should help clients evaluate whether Trump accounts support their long-term savings goals and how the accounts interact with existing financial tools. Although the rules are not yet final, current guidance gives taxpayers and practitioners a framework for navigating the initial implementation period. As the Treasury Department and IRS continue developing regulations, tax professionals will play a key role in educating families and integrating Trump accounts into broader savings strategies.