Overview of Trump Accounts
Under the Working Families Tax Cuts (part of the One, Big, Beautiful Bill), Trump Accounts are new savings accounts (similar to IRAs) for individuals under age 18. Key features include:
- A $1,000 government contribution for each eligible child born 2025-2028, if an account is established before the child turns 18.
- Individual contributions allowed (up to (some limit) set by the new law) and certain employer contributions.
- Funds must be invested per law-specified investment types (e.g. indexed mutual/ETF funds).
- Withdrawals generally restricted until the beneficiary turns 18; after that age treated similar to traditional IRA rules. (irs.gov)
One concern was whether contributions to Trump Accounts would be treated as gifts of future interest, triggering gift tax rules and Form 709 for many donors. The IRS has addressed this through a safe harbor.
What the Safe Harbor Under Rev Proc 2026-25 Says
Revenue Procedure 2026-25 provides a transfer tax safe harbor so that certain contributions made to Trump accounts by individuals are considered “completed gifts” of present interest. That means:
- Annual per-donor gift tax exclusion (e.g. $19,000 in 2026) applies.
- No need to file Form 709 gift tax return for those contributions if all safe harbor conditions are met. (irs.gov)
Requirements for the Safe Harbor
To avoid gift tax reporting, donors must ensure all conditions in the procedure are met in the tax year:
- The donor is an individual.
- The only taxable gifts the donor makes in that calendar year are cash contributions to Trump Accounts for beneficiaries under 18.
- Total gifts to any beneficiary, including Trump account contribution, do not exceed the annual exclusion (e.g. $19,000 for 2026).
- The contributions don’t generate gift or GST tax liability after applying donor’s available exclusions.
- The donor does not otherwise file a gift tax return for that year.
If all are satisfied, contributions are treated as completed gifts of present interest, avoiding both gift tax filing and concerns about future-interest rules. (irs.gov)
Practical Example
Scenario: Parent Dana wants to contribute $15,000 in cash to Child’s Trump Account in 2026. Parent makes no other gifts. Since $15,000 is below the 2026 annual gift tax exclusion ($19,000), and all gifts are to Trump Accounts, Dana meets conditions. No Form 709 required.
If, instead, Dana gives $15,000 to the Trump Account and separately gives $10,000 cash to a cousin in the same year, total gifts to the Trump-beneficiary still under $19,000, but because a non-Trump-Account gift is made, condition 5 fails—could be forced to file Form 709.
Why This Matters
- Reduces paperwork: No need for the average parent/donor to file gift tax returns in many cases.
- Clarifies tax treatment: Avoids uncertainty over “future interest” status of locked accounts.
- Policy goals: Encourages uptake of Trump Accounts without intimidating tax compliance burdens.
Watch-Outs & Tips
- Keep careful records of gifts made each calendar year. Monitor total gifts per beneficiary.
- Contributions must be cash — check, money order, or electronic, etc. Non-cash gifts aren’t covered.
- If you’re a donor who makes other taxable gifts in addition to Trump Account contributions, plan whether filing is required.
- Once funds move out of safe harbor (e.g., beneficiary age 18, or non-cash gifts involved), usual IRA-like rules kick in.
Takeaway: Revenue Procedure 2026-25 offers concrete relief and clarity for donors to Trump Accounts. Follow the rules, stay under exclusion thresholds, and you can avoid gift tax filing burdens.