The Treasury Department and the Internal Revenue Service have released proposed regulations aimed at clarifying how Trump accounts would work, including details around a pilot program for Treasury to make a one-time $1,000 contribution for certain eligible children.
The announcements offer early contours around how Trump accounts – introduced with much fanfare last year as a new type of individual retirement account for eligible children under the One, Big, Beautiful Bill Act – could become a new planning topic for advisors serving clients with young families, as well as a new operational burden for firms that may serve as trustees.
A notice on the IRS website explains that to be eligible for the program a child must:
The rules also outline who can file the election. The pilot program election must be filed by an individual who anticipates the child will be their qualifying child for the year the election is made, typically a parent or guardian. Treasury noted that expecting parents may want to make an election and could be in a position to do so before the tax year in which the child is born.
The agency also introduced a single form for eligible parties to open Trump Accounts, Form 4547, with instructions and Spanish-language versions.
As laid out under the proposed ground rules, the election to open an initial account would generally be made on Form 4547 or through an online version of the form, and it has to happen on or before Dec. 31 of the calendar year in which the eligible individual turns 17. The same election form includes an option for an authorized individual to request the $1,000 pilot contribution for an eligible child.
If the pilot contribution is not being requested at the same time the initial account is opened, the proposed rules include an ordering framework for who may make the election. From highest to lowest priority, that includes:
In most cases, the person who opens the account would become the responsible party, with authority to choose among eligible investments if more than one is offered, request certain rollovers and transfers, and name a successor responsible party while the beneficiary lacks legal capacity.
“Trump Accounts are a pro-family initiative that will help millions of Americans harness the strength of our economy to lift up this generation and generations to follow and unlock the American Dream,” IRS chief executive officer Frank J. Bisignano said.
Trump Accounts have received positive to mixed support since their announcement last year. A not-to-be-sniffed-at list of iconic individuals and leading firms – including centibillionaire Michael Dell and his wife Susan, Ray Dalio, BlackRock, and Robinhood and Schwab – have announced various plans to back the program with charitable donations and plans for matching contributions.
But some advisors have raised questions around the value Trump accounts bring to the table relative to existing options such as UTMAs or 529 plans. One trade group representing Main Street advisors has also urged policymakers to clarify how they would be treated under ERISA rules, as well as relax restrictions around the types of investments to be allowed in Trump accounts.
“Restricting access to broader investment options limits customization and prevents advisors from tailoring strategies to the specific needs of the individual,” Christopher L. Gandy, president of the National Association of Insurance and Financial Advisors, said in a statement accompanying a comment letter from the trade group last month.
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