The IRS on December 3 published Notice 2025-68, providing the first guidance on the establishment and operation of “Trump accounts,” a new type of tax-deferred savings account created under the One Big Beautiful Bill Act (OBBBA) for U.S. citizens under age 18 who have a Social Security number.
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What are the contribution rules?
How are Trump accounts invested?
What Are Trump Accounts?
Trump accounts are a new type of individual retirement account (IRA) for children who have not attained age 18 before the close of the calendar year in which the account is created. Starting July 4, 2026, Trump accounts may be established under new Internal Revenue Code Section 530A. No contributions are permitted before July 4, 2026. Amounts in a Trump account can be withdrawn for any reason starting January 1 of the calendar year in which the child attains age 18.
Accounts must be set up with an initial trustee selected by the U.S. Treasury. A parent or guardian can set up a Trump account by completing new IRS Form 4547 or through trumpaccounts.gov. As of the date of this bulletin, the Form 4547 has not been finalized, and the registration website is not yet operational. Set up of a Trump account includes an election to receive the $1,000 pilot program contribution for eligible children. Only one Trump account per individual is allowed, though rollovers to other providers are permitted. The account must be designated as a Trump account when established and follow specific rules, including being a traditional (not Roth) IRA trust or custodial arrangement under Section 408(a). The notice states that the IRS intends to release a sample written governing instrument for Trump accounts (similar to current IRS model IRA plan documents).
Trustees must meet extensive reporting requirements for contributions, rollovers, and annual disclosures to the IRS and beneficiaries. Trustees must prevent excess contributions and may return funds to contributors to avoid excise taxes.
The IRS plans to issue proposed regulations on Trump accounts and is seeking public comments through February 20, 2026.
What Are the Contribution Rules?
- Are there annual limits? Contributions to Trump accounts are capped at $5,000 annually for 2026 and 2027 (indexed in $100 increments after 2027). Pilot program contributions, “qualified general contributions” (made by state, local, or Indian tribal governments or 501(c)(3) tax exempt organizations), and rollovers are exempt from that limit.
- Who can contribute?
- Contributions can be made by parents and others (e.g., grandparents, friends, etc.), but no deduction by any individual is allowed for contributions to Trump accounts.
- Qualified general contributions by governments or tax-exempt organizations can be based on geographic area or date of birth, but no other eligibility requirements can be imposed.
- New Section 128 allows employer contributions up to $2,500 annually for 2026 and 2027 (indexed in $100 increments after 2027) per employee (not per child), which counts towards the annual $5,000 contribution limit and are excluded from the employee’s income. For example, if an employee has two children who are eligible for Trump accounts, the employer can contribute a total of $2,500 in 2026 per employee, not $2,500 per employee child. Employers must have a separate written plan to make Trump account contributions that complies with rules similar to dependent care assistance plans under Section 129, including nondiscrimination, eligibility, notification, and statements and benefits provisions.
- Section 128 Trump account contributions for an employee’s dependent(s) (but not the employee) can also be offered via salary reduction under an employer’s Section 125 cafeteria plan. Such contributions remain subject to the annual limitation on employer contributions discussed above. The IRS intends to issue rules clarifying that Trump accounts are permitted benefits under a Section 125 cafeteria plan, because generally deferred compensation plans are not allowed as qualified benefits.
- Under a pilot program set forth in new Section 6434, starting July 4, 2026, U.S. citizen children with a Social Security Number who were born after December 31, 2024, and before January 1, 2029, will be eligible to receive a one-time $1,000 federal contribution. The $1,000 will be deposited in the child’s Trump account no earlier than July 4, 2026, and as soon as practicable after enrollment is completed and verified.
- Additional private funding may be available. For example, Michael and Susan Dell are contributing $6.25 billion to fund Trump accounts, aiming to contribute $250 to children up to age 10 in U.S. ZIP code areas with median family incomes below $150,000, regardless of when they were born. That contribution is intended to inspire other private sector and charitable support for the savings initiative.
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Hopefully, the IRS will publish a model Section 128 written plan document that employers can use, similar to the recent IRS model plan document for qualified education assistance under Section 127. Guidance is expected to clarify that ERISA will not apply to employer Trump account programs.
- When must contributions be made? Contributions must be made by December 31 each year (not by the extended deadline for the taxpayer’s federal income tax return).
- What tax rules apply? Contributions to Trump accounts during the “growth period” (i.e., the period that ends before January 1 of the calendar year in which the child attains age 18) are not includible in income by the child. Pilot program contributions, qualified general contributions, and Section 128 employer contributions do not create tax basis in a Trump account. Contributions from other sources during the growth period create basis in the Trump account. Rollovers from a prior Trump account carry over any basis attributable to the funds being transferred. Contributions to Trump accounts do not impact the ability to make regular (or Roth) IRA contributions. Unlike contributions to IRAs, contributions to Trump accounts may be made even if the account beneficiaries do not have includible compensation.
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The notice facilitates the creation of a marketplace by allowing direct rollovers from one Trump account custodian or trustee to another. However, a rollover Trump account cannot be established after the growth period and no rollover contributions can be made to a new rollover Trump account. After the growth period, Trump accounts can be rolled over to an IRA for the child and in limited cases (for example, if there is no tax basis in the Trump account) may be rolled over into a tax-qualified workplace retirement plan if the child participates in that plan. Trump account plan documents may provide that immediately after the growth period, the Trump account will be transferred to a traditional IRA for the child. Any IRA trustee or custodian (including non-bank trustees and custodians) will be eligible to offer Trump accounts.
How Are Trump Accounts Invested?
- During the growth period, investments are limited to broad U.S. equity index funds or exchange traded funds (ETFs) that track a qualified index (for example, the S&P 500 stock market index or any other index that is comprised of equity investments in primarily U.S. companies, not including any industry or sector-specific index, but may include an index based on market capitalization), do not use leverage, and charge minimal fees.
- Annual fees and expenses cannot exceed 10 basis points (0.1%), excluding broker’s sales commissions. The notice requested comments on transaction fees, sales charges, loads, or redemption fees.
- Trustees or custodians must select a default investment and comply with these restrictions.
- Notably, during the growth period, Trump accounts cannot be invested in a money market fund or held in cash (except temporarily, such as dividends or amounts from sales of eligible investments).
- Trump accounts are not required to be invested in a single eligible investment, so multiple eligible investments for a single Trump account are permitted.
What Are the Distribution Rules?
- During the growth period, no distributions are permitted, except for qualified rollovers or due to the death of the child.
- Once a child attains age 18, Trump accounts can be paid to the child for any reason.
- Trump accounts cannot be closed and paid to the child during the growth period.
- Once a child attains age 18, the Trump account becomes subject to rules that apply to traditional, pre-tax (not Roth) IRAs, including inherited IRA treatment for beneficiaries, required minimum distribution (RMD) rules, 10% early withdrawal penalty, Roth conversions, and other rules (but IRA aggregation rules do not apply to Trump accounts). As with traditional IRAs, exceptions to the 10% penalty exist for certain medical expenses, qualified higher education expenses, and first-time homebuyers.
Action Steps for Employers
Employers should start considering whether to offer contributions to Trump accounts as a new employee benefit. Even though contributions are not permitted before July 4, 2026, employers will need to coordinate payroll and other administrative processes.
Please visit BDO’s Global Employer Services page for more information on how BDO can help.