Tax Planning

Trump Accounts: New Rules for IRA-like Accounts Created Under the Working Families Tax Cuts

Trump Accounts are a novel benefit enabling parents to build long-term savings for children. New proposed regulations clarify eligible investments and trustee rules to kick in for 2026 tax years.

By NomadicTax Research Team • 6 min read • August 28, 2026

## 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](https://www.irs.gov/newsroom/working-families-tax-cuts?utm_source=openai)) ### 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](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)) - 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](https://www.irs.gov/newsroom/working-families-tax-cuts?utm_source=openai)) ## 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](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 beneficiary doesn’t pick a fund, trustee must pick one that meets those criteria. ([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)) - After age 17, rules loosen—eligible investment restrictions no longer apply. ([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)) ## 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](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)) - Stakeholder comments on the proposed regulations are due by **October 20, 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)) --- 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.