The Investment Company Institute is calling on the Treasury Department to ensure that Trump Accounts, a new tax-preferred savings vehicle for children, are accessible through a broad range of IRA providers rather than limited to a single government-selected custodian.
That's just one of several asks and recommendations it outlined in a letter Wednesday as the agency prepares to launch the accounts by next year.
The group said that allowing multiple qualified providers – including non-bank trustees – would help foster competition, reduce administrative burden, and give families more choice.
“A competitive marketplace is key to the long-term success of the program, as it will incentivize firms to devote resources to promotion and education regarding the accounts,” the letter said.
The institute added that leveraging the “existing infrastructure and expertise of IRA providers” would also help reduce the government’s workload.
If Treasury ultimately opts for a single provider to administer the accounts, the group recommended that any related websites or materials be government-branded, rather than carrying the provider’s name. This “white-labeling” approach, the letter said, would help avoid giving any one firm an outsized advantage in the marketplace.
The letter also urged Treasury to interpret the rules around eligible investments as broadly as possible. It highlighted the face that under the current statute's restriction on leverage, Trump Accounts would exclude even mutual funds and ETFs that use leverage to cost-effectively meet redemptions, for example.
The institute asked Treasury to clarify that the leverage restriction should only apply to funds seeking leveraged returns, not those using short-term borrowing or derivatives for operational efficiency.
"We strongly recommend that Treasury clarify (in coordination with the SEC) the scope of this leverage restriction through guidance," the letter said.
The group also sought confirmation that the 0.1% annual fee cap mandated from Trump Accounts applies only to the investment options within the accounts, not to account-level fees. “Unnecessarily restricting the already narrow range of Eligible Investments will detract from the success of the Trump Accounts program,” the letter stated.
Providers should be able to offer a menu of eligible investment options, rather than being limited to a single default fund, the group said.
On the contribution side, the institute asked Treasury to clarify several points around employer contributions, including annual limits, how contributions can be allocated among multiple children, and the requirements for employer plan documents. The group also raised questions about nondiscrimination testing and tax treatment for employer-funded contributions.
The letter also highlighted the need for clear guidance on what happens when a Trump Account beneficiary turns eighteen. The group recommended that accounts automatically convert to traditional IRAs at that point, with no need for separate maintenance or tracking.
The institute also asked Treasury to specify the timing and operational steps for this transition, as well as how custodial arrangements should be handled after the beneficiary reaches the age of majority.
With the statutory launch date approaching, the institute pressed Treasury to provide more information on when accounts will be open and ready for contributions. The group said that providers need an estimated timeline for guidance and operational readiness in order to plan for rollovers and allocate resources.
“While we understand that Treasury aims to launch the program by July 2026, it would be helpful to provide more information, even informally, about when exactly Treasury intends that Trump Accounts will be open and ready to accept contributions," the group said.
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