What Are Trump Accounts?
“Trump Accounts,” introduced under the Working Families Tax Cuts (WFTC), function similarly to traditional IRAs, but are specifically for children. Each eligible child born between 2025 and 2028 qualifies. The government will make a one-time $1,000 contribution as a pilot. (irs.gov)
Key Features
- Parents or guardians open a Trump Account with IRS via Form 4547, as long as election is made before child turns 18. (irs.gov)
- Authorized contributions: up to $5,000/year from individuals; employers may contribute up to $2,500 per employee or dependent. Employer contributions are deductible, and for employees, generally excluded from gross income. (irs.gov)
Proposed Investment Regulations for Trump Accounts in 2026
Treasury and IRS issued proposed regulations (IR-2026-96) clarifying what counts as an “eligible investment” during the growth period (from account opening until beneficiary turns 17). Key rules include:
- Eligible investments are mutual funds or ETFs that:
- Track a primarily U.S. equity index like the S&P 500.
- Do not use leverage.
- Have annual fees/expenses no more than 0.1% of the fund balance. (irs.gov)
- If beneficiary doesn’t pick a fund, trustee must pick one that meets those criteria. (irs.gov)
- After age 17, rules loosen—eligible investment restrictions no longer apply. (irs.gov)
Suggestions for Parents / Guardians
- If choosing an investment, prioritize low-fee index ETFs/mutual funds that track broad U.S. markets.
- Understand whether your employer offers matching/tracker options—for employer contributions, check eligibility and tax treatment.
- Guard investments during the growth period to ensure compliance; once age 17 threshold passes, you’ll have wider options.
- Keep photos, statements, and trustee communications for record-keeping in case IRS audits eligibility criteria.
Timeline & Comment Period
- Proposed regulations apply to tax years beginning on/after Jan. 1, 2026. (irs.gov)
- Stakeholder comments on the proposed regulations are due by October 20, 2026. (irs.gov)
Trump Accounts offer a major opportunity for families to build tax-advantaged savings for kids, but the regulations around eligible investments will matter most for long-term outcome. Starting early, choosing wisely, and meeting 2026 deadlines can help maximize this new tool.