The Treasury Department and Internal Revenue Service issued proposed regulations on eligible investments for Trump Accounts for kids, setting strict limits on where funds can be invested during a child’s early years of saving. The regulations, announced on August 20 and published today, specify that during the growth period—from when an account is established until December 31 of the year before the child turns 18—funds may only be invested in mutual funds or exchange-traded funds that track an equity index of primarily U.S. companies, such as the S&P 500.
Under the proposed rules, eligible investments must not use leverage and must have annual fees and expenses of no more than 0.1 percent of the investment balance. If an account beneficiary does not select an eligible investment offered by the trustee, funds are automatically invested in an eligible investment chosen by the trustee, ensuring compliance with the restrictions.
Trump Accounts are a form of traditional IRA established under the Working Families Tax Cuts legislation for children under 18 with a valid Social Security number. The program launched on July 4, 2026, and includes a one-time $1,000 federal seed contribution for children born between January 1, 2025, and December 31, 2028. Parents, guardians, and other authorized individuals can contribute up to $5,000 per calendar year to the accounts, which grow on a tax-deferred basis.
The investment restrictions during the growth period reflect a policy focus on conservative, low-cost index investing. “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, according to the official announcement.
The proposed regulations take into account stakeholder comments received in response to earlier guidance issued in December 2025. Treasury and the IRS are now requesting additional comments from interested parties by October 20, 2026, with complete submission instructions available in the proposed regulations themselves. The rules are proposed to apply to tax years beginning on or after January 1, 2026.
Once the growth period ends—when the child reaches age 18—the investment restrictions no longer apply, and the account transitions to standard IRA rules. At that point, account beneficiaries gain broader investment options and may make their own decisions about how to manage their accumulated savings and tax-deferred growth. According to the INTERNAL_LINKS_POOL, Trump Accounts have reached 99 corporate and state contributors as the program expands, with employers and states increasingly offering matching contributions to support families’ participation in the initiative.
Sources
- Internal Revenue Service — Proposed regulations on eligible investments for Trump Accounts, announcement IR-2026-96, August 20, 2026; detailed investment restrictions and growth period rules
- Federal Register — Guidance on Eligible Investments for Trump Accounts, document 2026-17123, published August 21, 2026; investment criteria and trustee procedures
- U.S. Department of the Treasury — Press release on Trump Accounts launch and pilot program contribution details, May 28, 2026
- Congressional Research Service — Trump Accounts: Overview and Policy Considerations, June 15, 2026; program structure and growth period rules
