The Department of the Treasury and the Internal Revenue Service today issued proposed regulations on eligible investments for Trump Accounts, a new type of traditional IRA under the Working Families Tax Cuts.
“These proposed regulations will provide clarity for trustees and beneficiaries of Trump Accounts, thus encouraging eligible participants to invest in low-fee mutual funds and ETFs that will grow on a tax-deferred basis potentially over their entire lives,” said IRS Chief Executive Officer Frank J. Bisignano. “Funds deposited in Trump Accounts enable American children to start investing now and enjoy years of compound earnings for their future college, retirement and other needs.”
Eligible investments for Trump Accounts
Funds in a Trump Account may only be invested in eligible investments during the growth period, which begins when the account beneficiary’s initial Trump Account is established and ends on Dec. 31 of the calendar year in which the account beneficiary turns age 17. After the growth period, the eligible investment restrictions no longer apply.
For Trump Accounts, an eligible investment generally is a mutual fund or exchange traded fund that tracks an equity index of primarily U.S. companies, such as the S&P 500 index, does not use leverage, and has annual fees and expenses of no more than 0.1 percent of the balance of the investment in the fund.
If an account beneficiary does not select an eligible investment offered by the trustee, funds in a Trump Account automatically will be invested during the growth period in an eligible investment selected by the trustee.
The proposed regulations provide rules for determining whether an investment is an eligible investment and procedures for a trustee to ensure that funds are invested in an eligible investment. These regulations generally would apply to tax years beginning on or after Jan. 1, 2026.
Request for comments
These proposed regulations take into account stakeholder comments regarding eligible investments that were made in response to Notice 2025-68 , issued in December 2025.
Treasury and the IRS also now request additional comments from interested parties by Oct. 20, 2026. Complete instructions on submitting comments can be found in the proposed regulations.
Sign up for a Trump Account and the pilot program
Parents, guardians, and other authorized individuals, can use IRS Individual Online Account to complete Form 4547, Trump Account Election(s) to open a Trump Account for a child with a Social Security number if the election is made before the calendar year in which the child turns age 18. If that child is a U.S. citizen born in 2025 through 2028, the parent or other individual who qualifies to make the election can check a box on Form 4547 to elect a $1,000 pilot program contribution for the child’s Trump Account.
Under the proposed Treasury and IRS rules, all money in a Trump Account must be invested in qualified mutual funds or exchange-traded funds (ETFs). These funds are required to passively track a broad-based index of primary U.S. equities, such as the S&P 500. Individual stock picks, actively managed funds, bonds, high-risk sector funds, and alternative investments (like cryptocurrencies) are not allowed.
No. Personal contributions made by parents, family members, or guardians are made with after-tax dollars and are not tax-deductible on your federal tax return. However, the money inside the account grows tax-deferred—meaning you will not pay taxes on capital gains or dividends as the funds grow over time.
Employers can contribute up to $2,500 per year to an employee’s or a dependent’s Trump Account as a workplace benefit. These employer contributions are excluded from the employee’s gross taxable income and count toward the account’s overall annual limit of $5,000.
Children born between January 1, 2025, and December 31, 2028, who have a valid Social Security Number are eligible for a one-time $1,000 pilot deposit funded by the government. Children under 18 born outside of this specific four-year window can still have a Trump Account opened for them, but they do not qualify for the $1,000 federal seed money.
No withdrawals or distributions of any kind are allowed before January 1 of the calendar year the child turns 18. Once the beneficiary reaches age 18, the account automatically transitions to operate like a traditional IRA. Standard distributions taken prior to age $59\frac{1}{2}$ will generally incur ordinary income tax plus a 10% early withdrawal penalty, unless used for standard IRA exceptions (such as higher education expenses or a first-time home purchase).
Manoj Sharma is a Senior Writer on the banking team at Tax Assistant. He provides information on budgeting, bank accounts, the banking industry, and other related topics. Using original data and methodologies, he helps you identify the best financial institutions, accounts, and products tailored to your needs. Manoj holds a degree in Journalism and Political Science from Syracuse University. All articles are strictly reviewed and fact-checked by our panel of expert Chartered Accountants, including CA Devendra Saini, CA Nikhil Khunteta, and CA Ankit Goyal
