Families opening Trump accounts do not receive the same investment freedom they would have in an ordinary brokerage account. While a child is young, the account generally must hold low-cost funds tied to broad indexes of U.S. stocks. Individual stocks, actively managed funds, bond funds, sector funds and numerous alternative strategies are generally off limits.
The Treasury Department and IRS have now proposed regulations explaining how those restrictions would work in greater detail. The proposal addresses which indexes and funds could qualify, how investment fees would be measured, how trustees would monitor the available funds and how money would be handled when no investment instructions are provided.
The regulations were published in the Federal Register on August 21, 2026. Written comments and requests for a public hearing are due by October 20, 2026. Because these are proposed regulations, they reflect Treasury and the IRS’s intended approach but are not yet final.
For more on the broader rules governing these accounts, including eligibility, contributions and taxation, see What Are Trump Savings Accounts and How Do They Work?(opens in new tab) and Trump Accounts: Questions and Hurdles Before Launch(opens in new tab).
Who Can Have a Trump Account?
A Trump account is a special type of individual retirement account that generally can be established for a child who has a valid Social Security number and will not turn 18 before the end of the calendar year. It is not limited to children born in 2025 or later.
The separate $1,000 federal contribution has narrower eligibility rules. An eligible U.S.-citizen child born from January 1, 2025, through December 31, 2028, may receive that one-time contribution if the required election is made.
Parents, grandparents, employers and others generally may contribute a combined total of up to $5,000 annually in 2026 and 2027. Certain government and charitable contributions, the $1,000 federal contribution and qualified rollovers do not count toward that annual limit. The $5,000 limit is scheduled to be adjusted for inflation after 2027.
The account’s special “growth period” begins when the initial account is established and ends on December 31 of the year in which the child turns 17. During that period, distributions generally are prohibited and the account’s investments are restricted. After the growth period, most of the special Trump account rules end and the account generally becomes subject to the rules governing traditional IRAs.
The Basic Investment Restrictions Were Already in Place
The 2025 law that created Trump accounts established several central requirements for an eligible investment. It must be a mutual fund or exchange-traded fund, track the returns of a qualified stock index, avoid prohibited leverage and keep its covered annual fees and expenses at or below 0.1 percent of the investment’s value.
IRS Notice 2025-68(opens in new tab) supplied additional preliminary guidance in 2025. The new proposed regulations on eligible investments(opens in new tab) would formalize and expand that guidance rather than create the investment restrictions for the first time.
During the growth period, account funds generally must remain in one or more eligible investments. The proposal would permit cash to be held temporarily, but only for the time reasonably necessary to complete a permitted transaction such as an investment, reinvestment, distribution, rollover or payment of an allowable fee.
What Counts as a Qualified Index?
The S&P 500 is expressly recognized by the law as a qualified index. Another index could qualify if it is composed of equity investments in primarily U.S. companies and satisfies the law’s other conditions.
For an index other than the S&P 500, regulated futures contracts on that index generally must trade on a qualified board or exchange. An index also cannot qualify if it is limited to a particular industry or business sector, although an index organized by company size or market capitalization may qualify.
The proposal would retain a safe harbor for determining whether an index consists primarily of U.S. companies. An index would be treated as meeting that standard when domestic companies represent at least 90 percent of its weight.
The 90 percent figure is a safe harbor, not necessarily an absolute minimum. An index below that threshold could potentially satisfy the broader “primarily U.S. companies” standard, but it would not receive the certainty provided by the safe harbor.
A broad total-market index that includes large-, mid- and small-cap companies could qualify, but the “total market” label alone would not be enough. The index would still need to satisfy the domestic-company, equity-only, futures-contract and other requirements in the law and regulations.
The Fund Must Replicate the Index
A qualifying fund must seek to replicate the performance of a particular qualified index. The fund does not necessarily have to own every security in the index. It may use a representative sample of securities if those holdings are reasonably expected to reproduce the index’s performance.
That flexibility does not permit an actively managed strategy. A fund would not qualify if its objective is to select stocks, outperform the index or produce results that differ materially from the index.
Funds designed to reverse an index’s returns or change its volatility, risk or current-income characteristics also would not qualify. That would ordinarily exclude inverse funds, covered-call funds and similar strategies designed to deliver a different return pattern from the underlying index, along with a fund of funds that tracks more than one index at once.
How the Proposal Defines Prohibited Leverage
The law excludes funds that use leverage. The proposal would define that restriction by looking at whether borrowing, derivatives or economically similar strategies materially increase the risk of loss compared with an investment in the fund without those strategies.
This standard would not automatically disqualify an ordinary index fund merely because it uses common portfolio-management techniques. Short-term borrowing used to provide liquidity for redemptions or purchases, for example, would not necessarily constitute prohibited leverage. A fund also could use derivatives to obtain exposure to components of its index if doing so did not materially increase its risk of loss.
The proposal also confirms that ordinary securities lending, a common practice among index funds, does not count as leverage as long as the fund keeps its full economic exposure to the securities it lends out.
ESG Indexes Would Not Qualify
The proposed regulations would expressly exclude a fund that tracks an environmental, social or governance index. For this purpose, an ESG index would include an index that has, or is marketed as having, a focus on environmental, social or governance factors.
The original statute did not expressly mention ESG indexes. Treasury and the IRS are proposing this additional restriction under the statutory authority allowing the Treasury secretary to establish other eligibility criteria.
Treasury explained that an ESG index may limit its exposure to particular companies in a manner resembling an industry- or sector-specific fund. Rather than classifying ESG indexes themselves as sector indexes, however, the proposal would create a separate rule making funds that track them ineligible.
The 0.1 Percent Limit Covers More Than the Expense Ratio
An eligible fund’s covered annual fees and expenses cannot exceed 0.1 percent of the value of the investment. That is equal to no more than $1 annually for every $1,000 invested, although the actual dollar amount would change with the value of the holding.
The fund’s annual operating expenses generally would be determined from its prospectus. If the prospectus shows operating expenses reduced by a fee waiver or expense reimbursement, the reduced amount would be used. When a fund offers multiple share classes, each share class would be tested separately.
The proposal also would count direct fees charged by the fund, including transaction-related charges such as sales loads and redemption fees. Consequently, families should not look only at the advertised expense ratio. A fund with an operating expense ratio below 0.1 percent still could fail the test if additional covered fees push the total above the limit.
Custodial, administrative and similar charges imposed by the Trump account trustee would be treated separately from the investment fund’s fees. Payments to an independent personal adviser also generally would not count as fees imposed by the fund.
Those distinctions do not necessarily mean trustees will remain free to impose account-level charges without restriction. Treasury and the IRS are still considering whether trustee fees should be limited or prohibited because even relatively small charges could substantially reduce a child’s account balance over a long holding period.
How Investment Choices Would Be Administered
Under the proposed operating procedures, a trustee could make available only funds it had determined were eligible investments. The account beneficiary, or the responsible party authorized to act for the beneficiary, could provide instructions selecting from those available funds.
The proposal would not require every trustee to offer every fund that meets the federal requirements. A bank, brokerage or other trustee could offer a more limited menu, provided every available investment satisfied the eligibility rules.
Each trustee also would have to establish a default eligible investment. Contributions, sale proceeds and other amounts ready for investment generally would be placed in that default unless the beneficiary or responsible party provided different instructions.
The default could consist of one eligible fund or a combination of eligible funds in specified proportions. Trustees would be required to disclose the default when the account is established and whenever it is changed.
A trustee also would have to disclose how dividends and other fund distributions would be handled. Depending on the account terms and any instructions from the responsible party, those amounts could be reinvested in the fund that paid them, directed to the default investment or invested in another eligible fund.
Trustees Would Have an Ongoing Monitoring Duty
A trustee would make an initial eligibility determination before offering a fund to its Trump account customers. It then would have to review the fund periodically to confirm that it continued to qualify, including verifying its fees and expenses.
The proposal would require these subsequent determinations at least once every 12 months. A trustee could rely on the fund’s prospectus and other public documents required by federal securities law when performing the review.
If a previously eligible fund stopped satisfying the requirements, the trustee generally would have 30 calendar days to sell it, reinvest the proceeds in an eligible investment and disclose the reinvestment to the beneficiary. That deadline matters: if the ineligible holding isn’t corrected in time, the account could cease being both a Trump account and an IRA, which under general IRA rules can trigger a deemed distribution of the account’s full value.
A Separate Correction Rule Would Cover Administrative Errors
The proposal includes limited relief when an ineligible investment results from an administrative error by the trustee. If the trustee had established the required procedures but made an oversight or mistake in applying them, the account would not automatically lose its status if the error were corrected within the required period.
The trustee generally would have 30 calendar days from the first day of the error to dispose of the ineligible asset and reinvest the proceeds properly. It also would have to tell the beneficiary how long the error lasted, which assets were held and how much was reinvested.
Treasury and the IRS are considering whether trustees also should be allowed to replace earnings the account would have received if the money had been properly invested. They have requested comments on that possibility and on other correction procedures that might be appropriate.
Stock Contributions and Account Fees Remain Unresolved
Two subjects discussed in the proposal remain under consideration rather than being resolved by the proposed regulatory text.
First, Treasury and the IRS are seeking comments on ways to limit the effect of trustee and account-administration charges. One possibility would be to prohibit trustees from charging certain fees to the beneficiary or the account.
Second, Treasury is considering a future procedure under which readily tradable public-company stock could be transferred to the Treasury Department as part of a philanthropic contribution. This would not allow a parent or grandparent simply to deposit stock into an individual child’s Trump account and leave it there. During the growth period, the account itself would remain limited to eligible mutual funds and ETFs.
A Quick Checklist for Choosing a Fund
For most families, the rules above boil down to a short list of things to confirm before picking a fund, or before assuming your trustee’s default choice is a good one:
- Does it track a named broad U.S. index, such as the S&P 500 or a total-market index, rather than a sector, theme or actively managed strategy?
- Is the combined expense ratio and any additional fees at or below 0.1 percent?
- Is it labeled or marketed as ESG, sustainable or values-based? If so, it won’t qualify.
- What is your trustee’s default fund, and is that where you’re comfortable leaving contributions if you don’t actively choose something else?
What Families Should Take From the Proposal
The investment menu inside a Trump account is deliberately narrow. During the growth period, the account is intended to hold low-cost, unleveraged funds that passively track qualifying indexes consisting primarily of U.S. stocks. A conventional S&P 500 index fund will typically meet those requirements, but no fund should be assumed to qualify based only on its name or stated expense ratio.
These are still proposed regulations, not final ones. The trustee procedures around defaults, monitoring and corrections generally would not take effect until final regulations are published, so families comparing a Trump account with a 529 plan, custodial account or other savings vehicle should treat the core investment restrictions as settled and the administrative details as still being worked out.