Entity Setup
Navigating the “Trump Accounts” Rules: What Parents and Trustees Need to Know
Trump Accounts are a new type of traditional IRA for children under the Working Families Tax Cuts—these rules affect who can open them, how they’re invested, and what contributions are allowed.
By NomadicTax Research Team • 5-8 min read • August 24, 2026
## What is a Trump Account?
Trump Accounts are designed under section 530A of the Internal Revenue Code (added by the Working Families Tax Cuts (WFTC)). They act like traditional IRAs but with **special rules during a child’s “growth period** — from account opening until December 31 of the year the account beneficiary turns 17. After that, standard IRA rules apply. ([irs.gov](https://www.irs.gov/irb/2026-13_IRB?utm_source=openai))
## Newly Proposed Regulations on Eligible Investments
On August 20, 2026, the Treasury and IRS released proposed regulations (IR-2026-96) defining “eligible investments” for Trump Accounts *during the growth period*. Key features:
- Must be a mutual fund or ETF tracking a broad equity index—primarily U.S. companies (e.g., S&P 500). ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-eligible-investments-for-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
- Cannot use leverage. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-eligible-investments-for-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
- Must have annual fees/expenses no more than **0.1%** of fund balance. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-eligible-investments-for-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
If the beneficiary (or parent/trustee) doesn’t choose an eligible investment, the trustee provides one by default. These rules are set to apply for tax years **beginning on or after January 1, 2026**. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-eligible-investments-for-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
## Contribution and Pilot Program Highlights
- Parents, guardians, or other authorized individuals can open a Trump Account (via Form 4547) for a child with a Social Security number before the year the child turns 18. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-eligible-investments-for-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
- There’s a one‐time **$1,000 pilot program contribution** for U.S. citizen children born in 2025-2028, provided no previous pilot contribution has been made. ([irs.gov](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-on-eligible-investments-for-trump-accounts-under-the-working-families-tax-cuts?utm_source=openai))
## Practical Implications & Recommendations
| Scenario | What You Should Do |
|----------|-------------------------|
| You’re a parent considering opening a Trump Account | Review trustee options before opening the account, especially if the trustee offers low‐fee, index‐based funds that meet the new criteria. 🔍 |
| You already opened one in 2026 | Ensure investments meet the new eligible investment standards. Consider re‐allocating if they don’t. |
| Trustee or financial firm | Update fund offerings, disclosures, and default investment selections to comply with the proposed rules. |
## Actionable Steps
1. **Use Form 4547** or the equivalent web application to elect a Trump Account for eligible children. Make sure the SSN is valid and election is timely. ([irs.gov](https://www.irs.gov/irb/2026-13_IRB?utm_source=openai))
2. **Compare fund fees**—avoid investment options above 0.1% expense ratio. Some index funds may already meet this, others may not. |
3. **Document your selections**; if a default choice kicks in, ensure trustee documentation clearly shows compliance. |
4. **Track the pilot contribution eligibility**—the $1,000 grant is only for children born 2025-2028, one time. |
## How This Fits into Broader Tax Planning
Trump Accounts can grow tax‐deferred until distributions. They offer an opportunity for families to build savings for college or early adult expenses. Knowing these rules helps avoid unintended disqualifications or suboptimal investment choices.
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**Bottom Line:** The new proposed regulations aim to ensure safety, low‐cost investments in Trump Accounts during the growth period. Parents, trustees, and financial institutions should act proactively to align with the rules effective for tax years beginning January 1, 2026.