Treasury's Bizarre Rules for 'Trump Accounts' Kids' Investments
Published Date: 8/21/2026
Proposed Rule
Summary
This document contains proposed regulations relating to Trump accounts. The proposed regulations would provide guidance regarding eligible investments, which are the only assets in which Trump account funds may be invested before the first day of the calendar year in which the account beneficiary attains age 18. The proposed regulations would affect account beneficiaries and trustees of Trump accounts.
Analyzed Economic Effects
9 provisions identified: 5 benefits, 3 costs, 1 mixed.
Very low fee cap: 0.1% expense limit
To be eligible, a fund's total annual fees and expenses must not exceed 0.1% of the fund's net assets. The proposed rule treats fees charged directly to holders and fund operating expenses as part of that 0.1% test, computes expenses separately by share class, and applies prospectus-disclosed reduced expenses (after waivers) where shown.
Funds must track a single qualified index
An eligible fund must seek to replicate the returns of a single qualified index and may not be actively managed to perform differently from that index. Funds that try to track multiple indices (for example, a fund of funds tracking multiple indices) are not eligible unless they track a single index.
Leverage banned unless risk is not increased
An eligible investment may not use leverage that materially increases the risk of loss. Ordinary index fund activities (including some borrowings or derivatives used to replicate an index) are allowed so long as they do not materially increase the fund's risk, and securities lending is permitted if the fund retains full economic exposure to the lent securities.
Qualified index must be all-equity and mostly U.S.
A qualified index must be comprised entirely of equity investments (stocks or similar ownership interests) and must be comprised primarily of U.S. companies; the proposed rule offers a 90% U.S. weight safe harbor. The rule also excludes industry- or sector-specific indices and excludes investment funds that track ESG-focused indices.
Trustees must limit offerings and set defaults
Trustees must limit the investment options they offer for Trump accounts to funds the trustee has determined are eligible and must establish a default eligible investment for each Trump account. The default can be a single eligible investment or a combination in specified proportions, and the trustee must clearly disclose the default to the account beneficiary.
Trustee monitoring and 12‑month review rule
A trustee must make an initial eligibility determination before offering a fund to any Trump account and then perform periodic determinations at least once every 12 months, relying on prospectuses and public documents if desired. If a fund ceases to be eligible, the trustee must sell or dispose of shares and reinvest the proceeds in an eligible investment within 30 days, and must notify the account beneficiary after reinvestment.
Only mutual funds and ETFs allowed
Before the first day of the calendar year in which the Trump account beneficiary attains age 18, account funds may only be invested in mutual funds or exchange-traded funds (ETFs). The proposed rule explicitly includes ETF share classes of mutual funds as ETFs.
Administrative-error correction and disclosure rules
If a trustee's administrative error causes a portion of a Trump account to be invested outside eligible investments, the trustee must sell and reinvest the assets in an eligible investment within 30 calendar days and must disclose the error's duration, the assets held during the error, and the amount reinvested. The Treasury and IRS are also considering rules permitting trustees to replace earnings lost due to such errors and request comments on that approach.
Temporary cash holdings allowed; money funds generally barred
During the growth period a trustee may hold contributions, sale proceeds, dividends, or other amounts as cash for the time reasonably necessary to complete an investment, reinvestment, distribution, rollover, or payment of fees. The proposed rules generally do not permit investment in money market funds during the growth period except for short, temporary cash holdings to complete transactions.
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