As part of the One Big Beautiful Bill Act, the sweeping tax and domestic policy bill signed into law last July, the Trump Accounts were established under the Working Families Tax Cuts legislation to create new tax-advantaged savings accounts for children. The accounts can be funded starting July 4, 2026. The U.S. Department of the Treasury and the IRS have issued proposed regulations that provide guidance on general requirements and elections. The proposed regulations are expected to affect 73 million children in 44 million families.
Initial Guidance Regarding Trump Accounts
Trump Accounts are governed by Sections 530A and 6434 of the Internal Revenue Code (IRC). Trump Accounts are generally treated similarly to individual retirement accounts (IRAs), which are governed by IRC Section 408A, for federal income tax purposes. Trump Account beneficiaries must be under 18 years of age, possess a Social Security number, and elect (either directly or through an authorized individual) to create a Trump Account.
Through the Trump Account Contribution Pilot Program, children born after December 31, 2024, and before January 1, 2029, will be credited $1,000 upon establishing their Trump Accounts. Contributions to Trump Accounts are limited to a maximum of $5,000 per calendar year (which figure will be subject to cost-of-living adjustments for tax years after 2027), though the following contributions are exempt from the $5,000 cap:
Qualified rollover contributions (e.g., transferring funds from one Trump Account to a new Trump Account opened with a different custodian for the same beneficiary).
Qualified general contributions (e.g., payments from nonprofit organizations or state or local governments to the Treasury Department on behalf of a qualified class).
Contributions made under IRC Section 6434 (e.g., the aforementioned $1,000 seeding for eligible beneficiaries).
No distributions are allowed prior to the beneficiary reaching 18 years of age (what is known as the “growth period"). Distributions after age 18 are treated similarly to early IRA withdrawals and may be subject to a 10% penalty if made before the beneficiary reaches 59-and-a-half years of age, unless the distribution is for a qualified use (e.g., higher education expenses and health insurance premiums during a period of unemployment).
Trump Accounts may only invest in mutual funds or exchange-traded funds (ETFs) that track a “qualified index” (e.g., the S&P 500), do not use leverage, and do not have annual fees and expenses of more than 0.1% of the balance of the investment in the fund. Eligible investments do not include any industry or sector-specific index but may include an index based on market capitalization.
Proposed Regulations Cover Trump Account Requirements, Elections
On March 6, the Treasury Department and the IRS issued Proposed Section 1.530A–1, the main points of which are summarized below:
General Requirements
Trump Accounts would be considered a type of traditional IRA and, as such, be governed by a written instrument meeting the requirements of IRC Sections 408(a)(1) through (6). Trump Accounts could not be a SIMPLE IRA (Savings Incentive Match Plan for Employees) under IRC Section 408(p) and could not accept contributions from an employer’s simplified employee pension (SEP) arrangement under IRC Section 408(k). Trump Accounts must be titled as such, and a beneficiary will be treated as attaining an additional year of age as of their birthday for purposes of IRC Section 530A.
Electing to Open a Trump Account
Individuals authorized to open a Trump Account would include, in order of priority, a legal guardian, parent, adult sibling or grandparent of the eligible individual. Comments are requested on whether definitions are needed for “legal guardian,” “parent,” “sibling” and “grandparent.” Such authorized individual would represent, under penalty of perjury, that he or she is authorized to open the initial Trump Account for the eligible individual and that there is no other person with a higher priority available to make the election. Elections would be made via a form prescribed by the secretary of the Treasury (i.e., Form 4547) or through an electronic application or website made available by the secretary. The responsible party of the Trump Account would be the individual who makes the election to open such account.
What’s Next?
The proposed regulations reserve several items for further comment, including employer contributions to Trump Accounts and the proposed applicability date. Written or electronic comments and requests for a public hearing must have been received by May 8, 2026. Stradley Ronon is monitoring for further developments from the Treasury and government.
