IRS Proposes New Rules For Investments Held In Trump Accounts
The U.S. Department of the Treasury and Internal Revenue Service have released proposed regulations outlining the types of investments that may be held in Trump Accounts, the new tax-advantaged accounts created for eligible children under the Working Families Tax Cuts.
The proposed rules focus primarily on the account’s “growth period,” which begins when a beneficiary’s initial Trump Account is established and continues through December 31 of the year the beneficiary turns 17. During that period, account funds would be subject to specific investment restrictions.
Under the proposal, eligible investments generally would be limited to mutual funds or exchange-traded funds that track broad equity indexes composed primarily of U.S. companies. Qualifying funds could not use leverage and generally would be required to keep annual fees and expenses at or below 0.1% of the amount invested.
The restrictions are intended to steer Trump Accounts toward relatively low-cost, diversified investment vehicles during the beneficiary’s childhood. Once the growth period ends, the special eligible-investment restrictions would no longer apply.
The proposed regulations also address responsibilities for financial institutions serving as Trump Account trustees, including procedures designed to ensure that account funds remain invested in qualifying investments.
One particularly notable provision addresses what happens when the beneficiary or responsible party does not select an investment from the choices offered by the trustee.
Read the IRS guidance to find out how those funds would automatically be invested.
The regulations are proposed to apply generally to tax years beginning on or after January 1, 2026. Treasury and the IRS are accepting public comments on the proposal through October 20, 2026.
Trump Accounts are structured as a new type of traditional individual retirement account for eligible minors. Parents, guardians and other authorized individuals may establish an account for a child with a Social Security number before the calendar year in which the child turns 18. Certain U.S. citizen children born from 2025 through 2028 may also qualify for a one-time $1,000 federal pilot-program contribution.
Source: IRS
