On December 2, President Trump announced that a wealthy benefactor had committed to contribute $6.25 billion to seed certain Trump accounts, a new form of IRA for children under age 18. Trump accounts were codified under section 530A of the Internal Revenue Code by the One Big Beautiful Bill Act (OBBBA), and allow family members and others to contribute to an eligible child’s Trump account beginning July 4, 2026. Under OBBBA, the federal government will fund Trump accounts with a $1,000 contribution under a pilot program for eligible children born after December 31, 2024 and before January 1, 2029. The private funding will fund Trump accounts for children born before the qualifying date for the federal contribution, and there have been bipartisan calls for other business leaders and tax-exempt organizations to support the initiative.
Also on December 2, Treasury and the IRS (collectively referred to as “Treasury”) issued Notice 2025-68 (the “Notice”) to provide initial guidance on the establishment and operation of Trump accounts.
GROOM INSIGHT: The Notice gives account providers and employers valuable insights on how the Administration intends to structure the accounts, and facilitates the creation of a marketplace by establishing permissive rollover rules.
The Notice provides Q&As addressing the various Trump account requirements, along with a number of important clarifications regarding:
- how the accounts are established,
- available contribution sources (including the pilot program and employer programs),
- distribution and investment restrictions,
- reporting requirements,
- the (in)applicability of ERISA for employer programs.
The following summarizes these key clarifications.
Eligible Account Providers
The Notice specifies what financial institutions will be eligible to offer Trump accounts. OBBBA gives Treasury broad discretion to design the system, and some had questioned whether Treasury would limit the number of approved providers or restrict portability.
The Notice states that all Trump accounts must be established with the “initial trustee” (or trustees) selected by Treasury, regardless of the source of the contributions. Individuals will only be permitted to have a single account, but will be able to roll over their account to another provider through a direct trustee-to-trustee transfer. The Notice further states that any current IRA trustee or custodian, including IRS-approved non-bank trustees and custodians, will be eligible to offer the accounts, provided they satisfy various reporting and account administration requirements. Importantly, the Notice does not create any limitations on fees not otherwise in OBBBA (i.e., the 10 basis point limitation on investment fees).
Account Establishment
An account is established for an “eligible individual,” which is any individual (i) for whom an election is made to establish a Trump account, (ii) who has not attained age 18 before the close of the calendar year in which the election is made, and (iii) for whom a social security number has been issued before the date of the election.
An initial Trump account is established during the “growth period” (the period that ends before January 1 of the calendar year in which the child attains age 18) by an “authorized individual” on pending IRS Form 4547 (or a pending tool/application on trumpaccounts.gov – anticipated to be available mid-2026). If the account is set up at the same time as the election for a pilot program contribution, the “authorized individual” must be an individual who anticipates that the eligible child will be his or her qualifying child (as defined in Code section 152(c)) for the tax year in which the election is made. If the account is not set up at the same time as the pilot contribution election, the “authorized individual” must be a legal guardian, a parent, adult sibling, or grandparent of the eligible individual, in that order of priority.
After the election is made, Treasury or its agent will send information (beginning May 2026) to the authorized individual to activate the Trump account through an authentication process and complete the opening of the initial account. This authorized individual will be the responsible party for the account with authority to select investments, request a transfer for a qualified rollover contribution or qualified ABLE rollover contribution, or select a successor responsible party.
The initial Trump account can be transferred during the growth period through a qualified rollover contribution to a rollover Trump account, provided the initial account is closed. After the growth period, the account can be rolled into an IRA or, provided there is no tax basis[1] in the account, a qualified plan (401(a), 403(a), 403(b), governmental 457(b) plan). The account can also be structured to automatically transfer the account balance to a traditional IRA at the end of the growth period.
A few notable items regarding the written terms of a Trump account:
- It must be designated as a Trump account at time of establishment.
- It must be a trust or custodial arrangement under Code section 408(a), not a Roth or SIMPLE IRA.
- It must generally set forth the existing IRA rules and the new special Trump account rules – a “listing of required modification” or “LRM” sample language for such rules is pending with the IRS.
Contributions
During the growth period, several different contribution types can be made to an account, without impacting the ability to also make a full IRA contribution. There is an annual contribution cap of $5,000 (for 2026/2027, indexed thereafter), but the cap does not apply to qualified rollover contributions, pilot program contributions, or qualified general contributions. Unlike other types of traditional IRAs, the contribution for the year must be made by year-end (not the tax filing deadline).
The trustee is required to establish procedures to prevent excess contributions. Treasury is considering allowing trustees to establish a procedure for receiving contributions to a general account so that funds can be returned to the contributor prior to reaching the Trump account if any portion of the contribution would exceed the limit, and presumably avoiding a 6% excise tax.
A. Pilot Program Contributions
U.S. citizens born in 2025-2028 are eligible to receive $1,000 in seed money for the account, provided a proper election is made by an individual who anticipates that the eligible child will be his or her qualifying child (as defined in Code section 152(c)) for the tax year in which the election is made. Certain qualifying children will also receive $250 in seed money funded by the private donation. This election is made on an IRS Form 4547 or via trumpaccounts.gov. The contribution will be made to the initial account as soon as practicable after the election is made (not earlier than July 4, 2026).
B. Qualified General Contributions
A state (or political subdivision thereof) or charity (a section 501(c)(3) tax-exempt organization) can make qualified general contributions for a qualified class, which is processed through making an application (available after July 4, 2026) with Treasury, which will then transfer the contribution to the account trustees. For the initial rollout, pending Treasury’s designation of a “qualified geographic area,” a qualified class can consist only of: (1) all account beneficiaries who are in the growth period when the contribution is made; (2) all account beneficiaries who are in the growth period when the contribution is made and who live in one or more states (including the District of Columbia) specified by the general funding contribution; or (3) all account beneficiaries who are in the growth period when the contribution is made and who were born in one or more calendar years specified by the general funding contribution. Notably, no additional eligibility requirements can be imposed.
C. Employer Funding Program (Section 128 Employer Contributions)
Employers can make contributions to an account for their eligible employees or the employee’s eligible dependent children, up to $2,500 annually per employee (not per dependent child), and the contributions are excludable from the employee’s income. The Notice states that Treasury is working closely with the Department of Labor to issue guidance clarifying how employers can facilitate Trump accounts without creating an ERISA covered plan.
Prior to the Notice, a key open item was whether contributions can be made via salary reduction. The Notice clarifies that a Trump account contribution program may be offered via salary reduction as part of the employer’s cafeteria plan for the employee’s eligible dependent children (but not for an employee’s own account). Treasury intends to provide more guidance on how this would work in proposed regulations.
Distribution and Investment Restrictions
During the growth period, no distributions are permitted, except for a qualified rollover contribution or qualified ABLE rollover contribution, a distribution of excess contributions, or a distribution upon the death of the child. The Notice confirms that there is no exception for a hardship distribution, and that a transfer to an ABLE account can be made only during the calendar year in which the child attains age 17. If the account beneficiary dies during the growth period, the account ceases, and the assets are treated as distributed to the account beneficiary. After the growth period, the standard IRA rules apply (e.g., inherited IRA for the beneficiary). Lastly, the Notice explains that after the growth period, the account continues (unless the document provides for automatic transfer to a traditional IRA), and distributions from the account are generally subject to regular IRA distribution rules (although no aggregation of basis). The trustee must have procedures in place to comply with these restrictions.
During the growth period, no part of the account may be invested in any asset other than an eligible investment, which is any mutual fund or exchange traded fund (ETF) which (i) tracks the returns of a qualified index, (ii) does not use leverage, (iii) does not have annual fees and expenses of more than 0.10 percent of the balance of the investment in the fund, and (iv) meets such other criteria as the Secretary determines appropriate. The trustee must have procedures to comply with these restrictions, and must select a default investment that meets these requirements for any uninvested funds. The Notice provides extensive detail on what investments will meet these requirements (with very limited exception to hold cash).
Reporting Requirements
The trustee of the account must satisfy a number of reporting requirements, including:
- reporting on annual contributions, including the source of contributions, and the amount and identity of a contributor of a qualified general contribution (if requested)
- annual reporting to the IRS and account beneficiary (forms and instructions pending)
- disclosure statement (similar to IRAs)
- reports on qualified rollover contribution to IRS by receiving trustee, and report by the transferring trustee to the receiving trustee
Treasury intends to issue proposed regulations on Trump accounts, and seeks comments on Trump accounts generally as well as specific issues addressed in the Notice by February 20, 2026. Proposed regulations regarding the election to open an Account and the election for the pilot program contribution may be issued prior to February 20, 2026, in which case any comments not yet considered will be taken into account in the final regulations.
Next Steps
With this initial round of guidance, IRA providers, employers, and individuals can get a sense of what a Trump account is and how it works, though many open items remain. Much more to come as we add a new type of IRA to the mix of tax-deferred savings vehicles. Stay tuned!
[1] Pilot program contributions, qualified general contributions from a state or charitable organization, and employer contributions under Code section 128 do not create basis.
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