IRS Provides Initial Guidance on Trump Accounts

(Parker Tax Publishing December 2025)

The IRS announced upcoming proposed regulations and provided guidance regarding Trump accounts, a new type of IRA created by the One Big Beautiful Bill Act (Pub. L. 119-21) that will be available beginning in 2026 for eligible children. The notice addresses certain initial questions about Trump accounts, including account creation, the $1,000 pilot program contribution, and employer contributions; the notice also provides that the election to establish a Trump account will be made on forthcoming Form 4547, Trump Account Election(s), and an online tool is expected to be available at trumpaccounts.gov in the middle of 2026. Notice 2025-68.

Background

The One Big Beautiful Bill Act added Code Sec. 530A and related sections regarding Trump accounts. A Trump account is a type of traditional individual retirement account (IRA) available beginning in 2026 that is established for the exclusive benefit of an eligible individual and that is designated at its establishment as a Trump account. When the Trump account is opened, the eligible individual is the owner of the Trump account and is referred to as the account beneficiary.

A Trump account is subject to certain special rules inapplicable to other IRAs under Code Sec. 408, most of which apply only during the period that ends before January 1 of the calendar year in which the account beneficiary attains age 18 (growth period). For example, a child born on October 1, 2025, would turn age 18 on October 1, 2043, and therefore the last day of the growth period with respect to the child would be December 31, 2042. The special rules that apply only during the growth period include: (i) funds in a Trump account can be invested only in eligible investments, (ii) a Trump account has a separate contribution limit from other IRAs, (iii) a Trump account is generally not allowed to make distributions, (iv) no deduction by an individual is allowed under Code Sec. 219 for any contribution to a Trump account, and (v) trustees of Trump accounts have similar but different reporting requirements from trustees of other IRAs. After the growth period, most of these special rules cease to apply and the rules under Code Sec. 408 governing traditional IRAs generally apply.

Establishment. A Trump account is established for the exclusive benefit of an eligible individual. An eligible individual 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. The Secretary of the Treasury or his delegate will create or organize the Trump account (initial Trump account) for each eligible individual. During the growth period, a subsequent Trump account (rollover Trump account) may be established for an individual and must be funded by a trustee-to-trustee transfer of the entire account balance from the individual's existing Trump account (qualified rollover contribution).

Pilot program. Upon an election under the pilot program, $1,000 is paid by the Treasury Secretary to the Trump account of an eligible child. An eligible child means a qualifying child (as defined in Code Sec. 152(c)) who is born after December 31, 2024, and before January 1, 2029, who is a U.S. citizen, and for whom no prior pilot program election has been made. Additionally, the eligible child must have a social security number that is included with the election. The $1,000 deposited into the Trump account under the pilot program is excepted from reduction or offset and is subject to a special rule regarding interest under Code Sec. 6611(a). Individuals making improper elections under the pilot program are subject to penalties under Code Sec. 6659.

Contributions. During the growth period, there are five types of contributions that can be made to a Trump account:

(1) a pilot program contribution from the Treasury Secretary of $1,000 for an eligible child,

(2) qualified general contributions (funded by states (or political subdivisions thereof), the United States, the District of Columbia, Indian tribal governments, or Code Sec. 501(c)(3) tax-exempt organizations) for members of a qualified class of account beneficiaries,

(3) employer contributions that are not includible in the gross income of the employee under Code Sec. 128 (Section 128 employer contributions),

(4) qualified rollover contributions, and

(5) contributions from other sources (such as the account beneficiary, parents, or any other person).

Contributions to a Trump account during the growth period are not includible in income by the account beneficiary when made. Pilot program contributions, qualified general contributions, and Section 128 employer contributions do not create basis in a Trump account. Qualified rollover contributions are transfers from a prior Trump account and carry over any basis attributable to the funds being transferred. Contributions from other sources during the growth period create basis in the Trump account.

Unlike contributions to IRAs (which require an IRA owner to have includible compensation), contributions may be made to a Trump account during the growth period even if the account beneficiary does not have includible compensation. Pilot program contributions, qualified general contributions, and qualified rollover contributions are not subject to an annual contribution limit. However, all other contributions (that is, Section 128 employer contributions and contributions from other sources) during the growth period are subject to an aggregate annual limit of $5,000 (subject to cost-of-living adjustments after 2027).

Contributions to Trump accounts cannot be made before July 4, 2026.

Eligible Investments. During the growth period, funds in a Trump account may be invested only in eligible investments. An eligible investment, generally, is a mutual fund or exchange traded fund (ETF) that tracks an index of primarily U.S. companies, such as the Standard and Poor's 500 stock market index, does not use leverage, does not have annual fees and expenses of more than 0.1 percent of the balance of the investment in the fund, and meets other criteria that the Treasury Secretary determines appropriate.

Distributions. During the growth period, no distributions may be made from a Trump account, except for qualified rollover contributions, qualified ABLE rollover contributions, distributions of excess contributions, and distributions upon death of the account beneficiary. After the growth period (that is, starting January 1 of the calendar year in which the account beneficiary attains age 18), distributions from a Trump account generally are subject to the rules that apply to distributions from a traditional IRA, including that a distribution may be subject to the 10 percent additional tax on early distributions under Code Sec. 72(t) if an exception does not apply with respect to the account beneficiary (such as for distributions for qualified higher education expenses or first home purchases or distributions made after age 59 1/2).

Reporting. During the growth period, Trump accounts are not subject to the IRA reporting requirements of Code Sec. 408(i). Instead, Trump accounts are subject to reporting requirements under Code Sec. 530A(i). The reporting requirements under Code Sec. 530A(i) include language similar to the reporting requirements for IRAs under Code Sec. 408(i). However, Code Sec. 530A(i) includes additional reporting requirements that do not apply to other types of IRAs (such as information regarding the source of certain contributions, the investment in the contract (basis), and a report to the Treasury Secretary by a trustee that accepts a qualified rollover contribution no later than 30 days after such contribution is made). A person that fails to provide a required report under Code Sec. 530A(i) is subject to a penalty under Code Sec. 6693(a) unless the failure is due to reasonable cause.

After the growth period, the reporting requirements of Code Sec. 408(i) apply to the Trump account. For any given calendar year, a Trump account is never subject to reporting under both Code Secs. 408(i) and 530A(i).

Coordination with IRA rules.. After the growth period, nearly all of the special rules for Trump accounts (including those relating to contributions, investments, distributions, and trustee reporting) cease to apply. Accordingly, after the growth period, Trump accounts generally will be subject to the Code Sec. 408 rules that apply to other traditional IRAs (such as the rules related to contributions, distributions, required minimum distributions, rollovers, Roth conversions, ordinary income taxation, and reporting).

Nevertheless, a Trump account continues to be a Trump account after the growth period. An account initially established as a Trump account can never receive contributions under a Code Sec. 408(k) SEP arrangement or Code Sec. 408(p) SIMPLE IRA plan. Similarly, an account initially established as a Trump account can never be aggregated with other individual retirement arrangements when allocating basis related to a distribution from either the Trump account or another individual retirement arrangement.

Qualified general contributions. A qualified general contribution is made by the Treasury Secretary and funded by a general funding contribution from a state (or political subdivision thereof), the United States, the District of Columbia, an Indian tribal government, or a Code Sec. 501(c)(3) tax-exempt organization. It is distributed to the Trump accounts of account beneficiaries who are members of a qualified class.

Section 128 employer contributions. Section 128 employer contributions paid to a Trump account of an employee or a dependent of an employee are not includible in the employee's income. Such contributions are limited to $2,500, subject to cost-of-living adjustments after 2027. Section 128 employer contributions must be made pursuant to a Code Sec. 128(c) Trump account contribution program. Requirements similar to requirements that apply to a Code Sec. 129 dependent care assistance program (regarding discrimination, eligibility, notification, statements, and benefits) apply to a Trump account contribution program.

Notice 2025-68

On December 2, the IRS issued Notice 2025-68 to announce that it intends to issue proposed regulations providing guidance with respect to Trump accounts. Section III of the notice addresses certain initial questions related to Trump accounts that will be addressed in the forthcoming proposed regulations. The Treasury Secretary and the IRS expect that the forthcoming proposed regulations will be consistent with the guidance set forth in Section III. Section IV contains a request for comments regarding Trump accounts.

Initial Creation of a Trump Account

An authorized individual may elect to have a Trump account established for the benefit of an eligible individual by filing Form 4547, Trump Account Election(s), or through an online tool or application on trumpaccounts.gov. A Trump account may be established at the same time as an election is made to receive a pilot program contribution under Code Sec. 6434 or at any other time before January 1 of the calendar year in which the beneficiary attains the age of 18. By making the election, the authorized individual is representing, under penalties of perjury, that he or she is authorized to elect to have the Trump account opened for the benefit of the eligible individual.

If an election to open the initial Trump account is being made at the same time as an election to receive a pilot program contribution under Code Sec. 6434, then the individual authorized to make the election under Code Sec. 6434 is also the authorized individual for opening the initial Trump account.

If an election to open an initial Trump account is not being made at the same time as the election to receive a pilot program contribution, then the authorized individual for opening the initial Trump account must be a legal guardian, parent, adult sibling, or grandparent of the eligible individual, in that order of priority. If multiple individuals have the same highest level of priority and no prior election has been made for the child, then any individual with that level of priority may make the election. For example, if there is no legal guardian, either parent of an eligible individual may make this election. This ordering rule of who has the authority to request the creation of an account was developed based on the ordering rule of Reg. Sec. 1.529A-2(c)(1)(C), and the IRS requests comments on whether the ordering rule should be based on a different method.

Once the IRS processes an election to open an initial Trump account, the IRS will process no further elections to open an initial Trump account for the same eligible individual.

For calendar year 2026, the election to open an initial Trump account may be made on IRS Form 4547 (once it is released) at any time, including at the same time that the 2025 income tax return is filed or through the online tool or application. The online tool or application for making the elections is expected to be available on trumpaccounts.gov in the middle of 2026.

After the election is made (and after the Treasury Department coordinates with the trustee of the initial Trump account), the Treasury Department or its agent will send information to the individual who made the election to activate the account through an authentication process and complete the opening of the initial Trump account. The Treasury Department or its agent will send this information starting in May 2026. For more information about how to activate the initial Trump account, go to trumpaccounts.gov.

The individual who made the election for the eligible individual will be the responsible party for the initial Trump account of that eligible individual. The responsible party generally will have the authority to select among eligible investments (if applicable), request a transfer for a qualified rollover contribution, request a transfer for a qualified ABLE rollover contribution, or select a successor responsible party for the account.

The IRS requests comments as to whether any guidance will be needed for selecting a new responsible party (for example, if the custody or guardianship of an eligible individual changes or in other appropriate circumstances).

Pilot Program

Code Sec. 6434(a) and (d) provide that, if an election is made by an individual for an eligible child of the individual, the eligible child will be treated as making a payment against the income tax imposed (for the tax year for which the election was made) of $1,000. Code Sec. 6434(b) provides that the amount of such payment will be paid by the Treasury Secretary to the Trump account of the eligible child.

Code Sec. 6434(c) provides that an "eligible child" means a qualifying child (as defined in Code Sec. 152(c)) born after December 31, 2024, and before January 1, 2029, for whom a prior election for a pilot program contribution has not been made, and who is a U.S. citizen. Code Sec. 6434(e) provides that the election must include the eligible child's social security number, which must have been issued to the child before the election.

The election to receive a pilot program contribution with respect to an eligible child must be made by an individual who anticipates that the eligible child will be his or her qualifying child (as defined in Code Sec. 152(c)) for purposes of Code Sec. 6434 for the tax year in which the election is made. If an individual makes an election in anticipation that the eligible child will be the individual's qualifying child under Code Sec. 152(c) and complies with all other rules promulgated by the Treasury Secretary for Code Sec. 6434 elections, the election will not be rendered ineffective solely on the basis that it is later determined that the eligible child does not meet the definition of a qualifying child of the individual for the tax year in which the election is made. This election is made on an IRS Form 4547 or through an online tool or application on trumpaccounts.gov.

For calendar year 2026, this election may be made on IRS Form 4547 (once it is released) at any time, including at the same time that the 2025 income tax return is filed or through the online tool or application. The online tool or application is expected to available in the middle of 2026.

If the election for the pilot program contribution with respect to an eligible child is made at the same time as the election to open an initial Trump account of the eligible child, then the pilot program contribution will be made to the initial Trump account.

A pilot program contribution will be deposited into the Trump account of an eligible child no earlier than July 4, 2026. The Treasury Department will make the pilot program contribution as soon as practicable after the election is made and the Treasury Department can confirm with the initial Trump account trustee that the account has been opened.

Section 128 Employer Contributions

For a calendar year, up to $2,500 (subject to cost-of-living adjustments after 2027) may be excluded from gross income of the employee under Code Sec. 128(b)(1) for a contribution made by an employer pursuant to a Trump account contribution program. This annual limit is per employee and not per dependent of the employee. For example, if an employee has two or more children that have Trump accounts, an employer with a Trump account contribution program may only contribute up to $2,500 in the aggregate for 2026 to those Trump accounts.

When making a contribution pursuant to a Trump account contribution program, an employer must affirmatively indicate to the trustee of the Trump account that the contribution is a Section 128 employer contribution excludible from gross income of the employee. The trustee of the Trump account may rely on the information from the employer, unless the trustee has knowledge to the contrary.

In most, but not all, circumstances, a Trump account contribution may be offered via salary reduction under a Code Sec. 125 cafeteria plan. Specifically, a Trump account contribution program may be offered via salary reduction under a cafeteria plan if the contribution is made to the Trump account of the employee's dependent, but not if the contribution is made to the Trump account of the employee. Although a Trump account contribution program would be a qualified benefit under Code Sec. 125(f)(1), a contribution under the Trump account contribution program to a Trump account of the employee would provide deferred compensation under Code Sec. 125(d)(2)(A), because the employee would have a vested right to compensation that may be payable to that individual in a later year. The Treasury Department and the IRS intend to address rules related to the coordination of Trump account contribution programs and Code Sec. 125 cafeteria plans in proposed regulations.

Notice 2025-68 also provides guidance regarding contributions, eligible investments, distributions, reporting rules, and coordination with IRA rules.

For a discussion of Trump accounts, see Parker Tax ¶134,700.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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