Proposed Rule2026-17123
Guidance on Eligible Investments for Trump Accounts
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
August 21, 2026
Issuing agencies
Treasury DepartmentInternal Revenue Service
Abstract
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.
Full Text
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[Federal Register Volume 91, Number 161 (Friday, August 21, 2026)]
[Proposed Rules]
[Pages 54280-54295]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-17123]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[CC-00349938-26]
RIN 1545-BS14
Guidance on Eligible Investments for Trump Accounts
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking.
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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.
[[Page 54281]]
DATES: Written or electronic comments and requests for a public hearing
must be received by October 20, 2026.
ADDRESSES: Commenters are strongly encouraged to submit public comments
electronically via the Federal eRulemaking Portal at <a href="https://www.regulations.gov">https://www.regulations.gov</a> (indicate IRS and CC-00349938-26) by following the
online instructions for submitting comments. In accordance with 5
U.S.C. 553(b)(4), a summary of this proposed rule is also available on
the Federal eRulemaking Portal. Requests for a public hearing must be
submitted as prescribed in the ``Comments and Requests for a Public
Hearing'' section. Once submitted to the Federal eRulemaking Portal,
comments cannot be edited or withdrawn. The Department of the Treasury
(Treasury Department) and the IRS will publish for public availability
any comments submitted to the IRS's public docket. Send paper
submissions to: CC:PA:01:PR (CC-00349938-26), Room 5503, Internal
Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC
20044.
FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations,
Justin R. Karlin at (202) 317-6842; concerning submissions of comments
or a public hearing, the Publications and Regulations Section at (202)
317-6091 (not toll-free numbers) or by email at <a href="/cdn-cgi/l/email-protection#7d0d081f11141e15181c0f14131a0e3d140f0e531a120b"><span class="__cf_email__" data-cfemail="304045525c595358555142595e5743705942431e575f46">[email protected]</span></a>
(preferred).
SUPPLEMENTARY INFORMATION:
Authority
This document contains proposed regulations under section 530A of
the Internal Revenue Code (Code) that would amend the Income Tax
Regulations (26 CFR part 1). The proposed regulations are issued under
the express delegation of authority provided in section
530A(b)(3)(A)(iv), which authorizes the Secretary of the Treasury or
the Secretary's delegate (Secretary) to specify criteria (in addition
to those listed in section 530A(b)(3)(A)) that a mutual fund or
exchange traded fund must meet to be an eligible investment. The
proposed regulations are also issued under the express delegation of
authority under section 530A(g)(3), which provides that in selecting
the trustee of a Trump account created or organized by the Secretary,
the Secretary shall take into account the costs imposed by the trustee
on the account or the account beneficiary. Finally, the proposed
regulations are issued under the express delegation of authority under
section 7805(a) of the Code, which authorizes the Secretary to
``prescribe all needful rules and regulations for the enforcement of
[the Code], including all rules and regulations as may be necessary by
reason of any alteration of law in relation to internal revenue.''
Background
I. Statutory Provisions
Section 70204 of Public Law 119-21, 139 Stat. 72 (July 4, 2025),
commonly referred to as the One, Big, Beautiful Bill Act, added new
sections 530A, 128, and 6434 to the Code. Section 530A provides for the
establishment of a Trump account for an eligible individual. Section
128 provides rules for employer contributions to a Trump account.
Section 6434 provides rules for a one-time $1,000 pilot program
contribution by the Secretary to the Trump account of an eligible child
with respect to whom an election is made under section 6434.
A Trump account is an individual retirement account (as defined in
section 408(a)) (IRA) not designated as a Roth IRA that is established
for the exclusive benefit of an eligible individual (as defined in
section 530A(b)(2)) or such eligible individual's beneficiaries under
section 530A. Special rules apply to the Trump account during the
period that begins when an initial Trump account is first established
for an account beneficiary (as defined in section 530A(b)(4)) and ends
on December 31 of the calendar year in which the account beneficiary
reaches the age of 17 (the growth period). The special rules concern
contributions, investments, distributions, and reporting. After the
growth period, most of the special rules no longer apply, and the rules
under section 408 governing traditional IRAs generally apply.
The definition of a Trump account in section 530A(b)(1)(C)(iii)
provides that the written governing instrument creating the Trump
account must meet several requirements, one of which is that no part of
the account funds will be invested in any asset other than an eligible
investment during the growth period.
Section 530A(b)(3)(A) provides that the term eligible investment
means any mutual fund or exchange traded fund that tracks the returns
of a qualified index, does not use leverage, does not have annual fees
and expenses of more than 0.1 percent of the balance of the investment
in the fund, and meets such other criteria as the Secretary determines
appropriate for purposes of section 530A.
Section 530A(b)(3)(B) provides that the term qualified index means
the Standard and Poor's 500 stock market index, or any other index that
is comprised of equity investments in primarily United States (U.S.)
companies, and for which regulated futures contracts (as defined in
section 1256(g)(1)) are traded on a qualified board or exchange (as
defined in section 1256(g)(7)). Section 530A(b)(3)(B) provides that
such term shall not include any industry or sector-specific index, but
may include an index based on market capitalization.
II. Published Guidance
Notice 2025-68, 2025-52 IRB 856, informed taxpayers that the
Treasury Department and the IRS intend to propose regulations on Trump
accounts. The notice described guidance expected to be included in the
proposed regulations in the form of answers to specific questions,
including questions about eligible investments. Notice 2025-68
requested comments, with a comment period that ended February 20, 2026,
and comments received in response to the notice are discussed below.
On March 9, 2026, the Treasury Department and the IRS published a
notice of proposed rulemaking (REG-117270-25) in the Federal Register
(91 FR 11194) on the general requirements for Trump accounts, certain
definitions relating to Trump accounts, rules regarding the election to
open an initial Trump account, and rules regarding the responsible
party for the initial Trump account. On the same day, the Treasury
Department and the IRS also published a notice of proposed rulemaking
(REG-117002-25) in the Federal Register (91 FR 11203) on making an
election under section 6434 for the Trump account of an eligible child
to receive a $1,000 pilot program contribution. This document proposes
rules regarding eligible investments that implement section
530A(b)(1)(C)(iii) and (b)(3). The Treasury Department and the IRS
anticipate proposing other rules under section 530A at a future date.
Explanation of Provisions
Proposed Sec. 1.530A-3 would provide guidance relating to eligible
investments for Trump accounts. The guidance includes proposed
definitions related to eligible investments, rules for determining
whether an investment is an eligible investment, and rules on how a
trustee \1\ of a Trump account ensures that a Trump account meets
[[Page 54282]]
requirements concerning eligible investments.
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\1\ A reference to a trustee includes a custodian of an IRA that
is a section 408(h) custodial account.
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I. Determining Whether an Investment Is an Eligible Investment
Proposed Sec. 1.530A-3(b) would provide definitions of terms for
purposes of section 530A(b)(1)(C)(iii) and (b)(3). The definitions of
eligible investment in proposed Sec. 1.530A-3(b)(1) and qualified
index in proposed Sec. 1.530A-3(b)(5) restate the definitions in
section 530A(b)(3)(A) and (B).
A. Form of Entity
Under section 530A(b)(3)(A), an eligible investment must be either
a mutual fund or an exchange traded fund (ETF). Neither mutual fund nor
ETF is defined in the Code. Notice 2025-68, in question and answer
(Q&A) D-1, contained definitions of both terms intended to be
consistent with their ordinary meanings.
One stakeholder recommended that the definition of ETF be revised
so that it would include ETF share classes of mutual funds. The
Treasury Department and the IRS agree with the recommendation because
ETF share classes are within the category of investments ordinarily
referred to as ETFs.
Under proposed Sec. 1.530A-3(b)(2), an ETF would be defined as a
domestic corporation (including a regulated investment company (RIC))
that is registered under the Investment Company Act of 1940, Public Law
76-768, 54 Stat. 789 (the 1940 Act), as amended, and that is either (i)
an ``exchange-traded fund'' as defined for purposes of the 1940 Act in
17 CFR 270.6c-11(a)(1) or (ii) an entity that operates in substantially
the same manner as an exchange-traded fund but that is not described in
17 CFR 270.6c-11(a)(1), such as a unit investment trust or ETF share
class of a mutual fund operating as an ETF under exemptive relief
granted by the Securities and Exchange Commission.
Like Notice 2025-68, proposed Sec. 1.530A-3(b)(4) would provide
that the term mutual fund means a domestic corporation (including a
RIC) that is registered under the 1940 Act as an open-end company (as
defined in 15 U.S.C. 80a-5(a)(1)) and that is not an ETF. Proposed
Sec. 1.530A-3(b)(3) would define the term investment fund to mean a
mutual fund or an ETF.
B. Tracks the Returns of a Qualified Index
Section 530A(b)(3)(A)(i) provides that, to be an eligible
investment, a mutual fund or ETF must track the returns of a qualified
index. Notice 2025-68 (Q&A D-2) stated that a mutual fund or ETF tracks
the returns of an index if its investment objective is to provide
investment results that, before fees and expenses, replicate the
performance of the index, and the fund holds investments that are
reasonably expected to accomplish that objective (by, for example,
holding shares of all of the stocks that are constituents of the index
in proportion to their weightings).
A stakeholder recommended that guidance emphasize that the standard
is a requirement to seek to replicate index returns, rather than to
eliminate all deviations of fund performance from index performance.
The Treasury Department and the IRS confirm that the reference to the
fund's objective is intended to require a fund to seek to replicate the
returns of an index.
The stakeholder also recommended clarifying that an investment fund
intending to replicate the returns of an index is not always required
to hold all the underlying stocks included in its chosen index. An
investment fund may hold less than all of the components of an index
and still closely track the index's returns. The Treasury Department
and the IRS agree that tracking the returns of an index does not
require holding each component of the index. The example in the notice
was illustrative and not an additional requirement, and proposed Sec.
1.530A-3(c)(1) would acknowledge the possibility of tracking the
returns of an index by holding less than all of its components.
Notice 2025-68 (Q&A D-2) also described investment objectives and
strategies that are not consistent with tracking the returns of an
index: an objective to provide investment results inverse to the
performance of the index or a strategy to outperform or perform
differently from the index. As examples of the latter, the notice
described funds that increase or decrease exposure to some index
constituents based on the judgment of advisors, or that hold assets in
some or all market conditions intended to decrease or increase the
volatility, risk, or current income associated with the index.
Stakeholders have asked whether actively managed investment funds
pursuing a strategy other than seeking to replicate the performance of
a particular index can be eligible investments. Investing Trump account
funds in an investment fund that does not track the returns of an index
would be directly contrary to section 530A(b)(3)(A)(i). These proposed
regulations would follow section 530A(b)(3)(A)(i), under which an
investment fund that is actively managed is not an eligible investment.
One stakeholder expressed concern that the discretion exercised by
managers or advisors of typical index funds would prevent those funds
from being eligible investments under the standards described in the
notice. Managers or advisors exercise discretion in pursuing their
objective to replicate the returns of an index, including determining
which index components to hold and when to execute trades. The
stakeholder suggested that the language of the notice describing
increased or decreased exposure to index constituents based on the
judgment of advisors might be read as disqualifying an investment based
on these or similar exercises of discretion. The Treasury Department
and the IRS acknowledge this concern. Accordingly, proposed Sec.
1.530A-3(c)(2) would exclude the reference to the discretion of
advisors, so that advisors can make necessary decisions in pursuit of a
fund's objective to replicate the performance of an index.
The stakeholder also suggested that the reference to strategies
used to ``outperform'' an index be eliminated as unnecessary in light
of the more general reference to strategies used to ``perform
differently'' from the index. The word ``outperform'' is intended to
clarify that an objective to perform differently from an index includes
an objective to outperform the index. Therefore, the proposed
regulations do not reflect this suggestion.
One stakeholder asked for clarification regarding whether an
investment fund may engage in securities lending to generate additional
income while still being considered to track the returns of an index.
Income from securities lending may be viewed as inconsistent with the
general principle in proposed Sec. 1.530A-3(c)(2) that an eligible
investment may not use a strategy to perform differently from the
relevant index, because securities lending generally increases the
current income of the fund. Securities lending, however, appears to be
consistent with the language and purposes of section 530A(b)(3). The
statute does not mention securities lending, but securities lending by
investment funds is common.
Moreover, an investment fund may engage in securities lending in a
way that allows the fund to retain all of the economic benefits and
burdens associated with the affected security. Section 1058(b)
describes conditions under which a securities lending transaction is
treated as a nonrecognition transaction to the lender. An investment
fund that engages
[[Page 54283]]
in securities lending continues to provide investors with passive
participation in the performance of the index, so long as the fund
retains its economic exposure to the securities lent. Therefore,
proposed Sec. 1.530A-3(c)(3) would provide, as an exception to the
general rule in proposed Sec. 1.530A-3(c)(2), that an investment fund
does not fail to track the returns of an index because the investment
fund engages in securities lending transactions so long as the fund
retains full economic exposure to the securities lent.
Stakeholders requested clarification regarding whether a fund of
funds may be an eligible investment. A fund of funds is an investment
fund that invests in other investment funds (acquired funds). One
stakeholder recommended that a fund of funds tracking multiple indices
through its acquired funds be treated as tracking the returns of a
qualified index. Section 530A(b)(3)(A)(i) requires an eligible
investment to track the returns of ``a qualified index'' (emphasis
added). A fund of funds that tracks multiple indices is not described
in section 530A(b)(3)(A)(i). Providing rules to allow an eligible
investment to track multiple indices would also add unnecessary
complexity. Therefore, these proposed regulations would not treat any
fund, including a fund of funds, that replicates the returns of
multiple indices as an eligible investment. However, nothing in these
proposed regulations would preclude a fund of funds from being an
eligible investment if it tracks a single index and meets all of the
other requirements in section 530A(b)(3).
C. Does Not Use Leverage
Section 530A(b)(3)(A)(ii) provides that, to be an eligible
investment, a mutual fund or ETF must not use leverage. Notice 2025-68
(Q&A D-3) stated that a mutual fund or ETF is considered to use
leverage if, as a result of the fund's use of borrowings, derivatives,
or other strategies that are economically equivalent to borrowings, a
percentage change in the level of an index tends to cause a materially
greater percentage change in the value of the fund's portfolio.
A stakeholder suggested that the leverage standard is unnecessary,
because any fund using leverage as described in Q&A D-3 would also be
failing to track the returns of an index under Q&A D-2. The stakeholder
also explained that investment funds may use borrowing or their
equivalents to gain efficient exposure to only a portion of the
underlying index and that this practice, if assessed in isolation, may
lead to material variations in the portfolio as compared to the
performance of the underlying index. The stakeholder suggested that
leverage should disqualify an investment fund only if the fund's
borrowings or economic equivalents in their totality is inconsistent
with the fund's investment objective of seeking to track the returns of
a qualified index.
The Treasury Department and the IRS recognize that the requirements
in section 530A(b)(3)(A) to track the returns of an index and not to
use leverage are closely related, and that in Notice 2025-68, the
standard for leverage (Q&A D-3) substantially overlaps with the
standard for tracking the returns of an index (Q&A D-2). The
alternative standard proposed by the stakeholder, however, would
deprive the leverage provision of any significance because any fund
excluded for use of leverage under that alternative standard would also
be excluded for not tracking the returns of a qualified index. The
Treasury Department and the IRS, however, agree with the stakeholder
that the statutory exclusion of funds using leverage should not be read
to restrict the transactions that regular index funds (those not
seeking to multiply or magnify index changes) typically use to gain
efficient exposure to an index. The statutory exclusion of investment
funds that use leverage should be read to exclude the higher-risk
leveraged funds that are less suitable for many Trump account
beneficiaries. Therefore, these proposed regulations would define
leverage by reference to increased risk.
Proposed Sec. 1.530A-3(d)(1) would provide that an investment fund
is considered to use leverage if the fund uses borrowings, derivatives,
or other strategies that are economically equivalent to borrowings in a
way that materially increases the risk of loss associated with an
investment in the investment fund. Under this standard, as under Notice
2025-68, an investment fund uses leverage if, as a result of borrowings
or derivatives or another economic equivalent, a change in the level of
the index the returns of which the fund seeks to replicate tends to
cause a materially greater proportional change in the net value of the
fund's portfolio. Consistent with the stakeholder's recommendation,
this standard requires an inquiry into risk associated with the fund as
a whole and not one transaction in isolation.
Notice 2025-68 explained that borrowings and derivatives not
entered into to multiply or magnify index returns generally would not
be treated as leverage. The notice included as examples borrowings to
provide liquidity for redemptions or for purchases of portfolio
securities in connection with investment flows into the fund, and
entering into derivatives as part of a fund's strategy to replicate the
performance of an index.
Like Notice 2025-68, these proposed regulations would describe uses
of borrowings and derivatives that would not be expected to constitute
the use of leverage for purposes of section 530A(b)(3)(A)(ii). Under
the proposed regulations, however, whether any use of borrowings or
derivatives constitutes the use of leverage would depend on whether it
materially increases risk of loss. Proposed Sec. 1.530A-3(d)(2) would
provide that an investment fund is not considered to use leverage
merely because it borrows or uses derivatives as part of its strategy
to replicate the performance of an index, so long as the borrowings or
derivatives do not materially increase the risk of loss associated with
an investment in the investment fund. Thus, an investment fund is not
considered to use leverage merely because the fund incurs short-term
borrowings to provide liquidity for redemptions or to purchase
portfolio securities in connection with investment flows into the fund
or because the fund uses derivatives to gain synthetic exposure to
certain index components. For an investment fund that engages in
securities lending, proposed Sec. 1.530A-3(d)(2) would provide that
the investment fund's obligation to return collateral to the borrower
of the securities is not treated as leverage so long as the investment
fund takes appropriate steps to limit the risk of loss with respect to
the collateral. To limit the risk of loss with respect to cash
collateral, the investment fund must hold the collateral in cash or
highly liquid, conservative positions (like money market funds). To
limit the risk of loss with respect to non-cash collateral, the
investment fund must not sell the collateral or otherwise use the
collateral (for example, by pledging it) to increase the fund's
exposure to other assets.
D. Qualified Index
Section 530A(b)(3)(B) provides that a qualified index is the
Standard and Poor's 500 stock market index, or any other index that is
comprised of equity investments in primarily U.S. companies and for
which regulated futures contracts (as defined in section 1256(g)(1))
are traded on a qualified board or exchange (as defined in section
1256(g)(7)). Section 530A(b)(3)(B) also provides that a qualified index
does not include any industry or sector-specific
[[Page 54284]]
index but may include an index based on market capitalization.
Q&A D-5 in Notice 2025-68 stated that an index is considered to be
comprised of equity investments if the index is comprised entirely of
stocks and similar ownership interests in the form of partnership or
membership interests.
Several stakeholders requested guidance that would allow an index
with debt instruments as components to be a qualified index. Section
530A(b)(3)(B)(ii)(I) requires a qualified index to be ``comprised of
equity investments in primarily [U.S.] companies.'' It is consistent
with that statutory language for a qualified index to include some
equity investments in non-U.S. companies, but not for a qualified index
to include components other than equity investments. Accordingly,
proposed Sec. 1.530A-3(e)(5) would contain the same all-equity
requirement as the notice.
One stakeholder recommended that a qualified index include a total-
market index. While the term total-market may have different meanings,
an index that represents an equity market broadly, including large-cap,
mid-cap, and small-cap companies, may be a qualified index if the index
meets the requirements in proposed Sec. 1.530A-3(e). (For example, a
regulated futures contract on the index must be traded on a qualified
board or exchange and the index must be comprised of equity investments
in primarily U.S. companies.)
Q&A D-5 stated that a company is a U.S. company if it is domestic
under section 7701(a)(4). It also included a safe harbor under which an
index would be treated as comprised of equity investments in primarily
U.S. companies if U.S. companies represent at least 90 percent of the
index based on their weightings in the index.
Stakeholders suggested that the 90-percent standard in the safe
harbor was a higher threshold than what the statutory language
suggests. The Treasury Department and the IRS note that a variety of
provisions in the Code use ``primarily'' without providing a numerical
threshold. A safe harbor provides certainty for some indices, so that
the Standard and Poor's 500 stock market index is not the only index
assured of meeting the standard. Thus, proposed Sec. 1.530A-3(e)(7)
would retain the 90-percent safe harbor approach of the notice.
Q&A D-6 in Notice 2025-68 stated that an index is industry-specific
or sector-specific if the inclusion of a company depends on the kind of
business or industry in which the company is engaged.
Stakeholders did not comment on that aspect of the qualified index
requirement, and proposed Sec. 1.530A-3(e)(2) would provide
substantially the same rule. Under proposed Sec. 1.530A-3(e)(1),
whether an index is industry-specific or sector-specific would be
determined by reference to the index methodology for the index.
Proposed Sec. 1.530A-3(e)(1) would require a qualified index to have a
publicly available index methodology that describes the criteria for
inclusion in the index and the construction of the index.
Q&A D-6 also provided that environmental, social, and governance
(ESG) indices are sector-specific. A stakeholder recommended that an
index that has criteria for inclusion based on ESG factors not be
described as a sector-specific index. The stakeholder explained that
describing an ESG index as a sector-specific index may generate
confusion about the meaning of the term as it is used in other
contexts.
The Treasury Department and the IRS acknowledge that describing an
ESG index as a sector-specific index could generate confusion about the
meaning of the term. Accordingly, proposed Sec. 1.530A-3(e)(3) would
not describe an ESG index as a sector-specific index. Nevertheless, the
Treasury Department and the IRS have determined that it is appropriate
to exclude investment funds that track ESG indices because they limit
exposure to companies in a way that makes them similar to sector-
specific funds. Accordingly, under the authority provided in section
530A(b)(3)(A)(iv), proposed Sec. 1.530A-3(e)(3) would provide that any
investment fund that tracks the returns of an ESG index is not an
eligible investment. Proposed Sec. 1.530A-3(e)(3) would further
provide that an ESG index includes any index that has, or is marketed
as having, a focus on environmental, social, or governance factors.
Q&A D-6 also defined an index based on market capitalization, the
substance of which would remain unchanged in the proposed regulations.
Proposed Sec. 1.530A-3(e)(4) would provide that an index is based on
market capitalization if the inclusion of a company in the index
depends on the company having a market capitalization within a
specified range or over or under a specified threshold, or that meets
specified ranking criteria.
E. Limit on Annual Fees and Expenses
Section 530A(b)(3)(A)(iii) provides that, to be an eligible
investment, a mutual fund or ETF must not have annual fees and expenses
of more than 0.1 percent of the balance of the investment in the fund.
Q&A D-4 in Notice 2025-68 stated that an investment fund would meet
the requirements of section 530A(b)(3)(A)(iii) if the sum of its annual
fees and its annual expenses is not more than 0.1 percent of the value
of the fund's net assets. Q&A D-4 in Notice 2025-68 described a fund's
annual fees as including any annual or recurring fees charged by the
fund directly to the investor, as disclosed in a fund's prospectus. The
notice requested comments on the appropriate treatment of fees charged
for transactions.
A stakeholder recommended that all amounts that are not part of an
investment fund's expense ratio, including transactional fees such as
sales charges, loads, and redemption fees, be excluded from a fund's
fees and expenses for purposes of section 530A(b)(3)(A)(iii). Excluding
all fees is inconsistent with the language in section
530A(b)(3)(A)(iii), which limits ``fees and expenses.'' Both fees and
expenses reduce the real returns to investors. Excluding transactional
fees appears to be similarly inconsistent with the language and
purposes of section 530A(b)(3)(A)(iii), because an investment fund's
fees may be entirely transactional fees and such fees reduce real
returns to investors. Moreover, investment funds can structure their
fees in a variety of ways. A rule that excludes some fees from the
limit in section 530A(b)(3)(A)(iii) based on the form of the fees would
create an incentive for investment funds to charge or increase that
form of fee. Therefore, the limit on fees and expenses should apply to
recurring fees (as under the notice) and other fees (on which the
notice requested comments).
Proposed Sec. 1.530A-3(f)(1) would provide that an investment fund
is not an eligible investment if the sum of its annual fees and annual
expenses is more than 0.1 percent of the net value of its assets.
Amounts charged by investment funds directly to investment fund holders
are referred to as fees and addressed in proposed Sec. 1.530A-3(f)(2).
Amounts borne by investment fund holders indirectly in the form of
costs incurred by investment funds are referred to as expenses and
addressed in proposed Sec. 1.530A-3(f)(3).
Proposed Sec. 1.530A-3(f)(2)(ii) would provide that an investment
fund's fees include all amounts that the fund charges its investment
fund holders directly, without regard to how such amounts are computed,
when they are imposed, or how such amounts are
[[Page 54285]]
referred to in securities filings or marketing materials. Under
proposed Sec. 1.530A-3(f)(2)(i), the amount of an investment fund's
annual fees would generally be the aggregate amount of fees imposed by
the investment fund during the most recent fiscal year (for purposes of
the fund's securities filings) that has appeared in the fund's
prospectus, expressed as a percentage of the investment fund's average
net asset value for that fiscal year. If an investment fund's
prospectus discloses changes to the fund's fee structure that would
increase the annual fee amount, the computation must take into account
the change to the fee structure.
Q&A D-4 in Notice 2025-68 indicated that annual fees and annual
expenses will not include any amount that is paid to a broker or
intermediary and that is not specified or imposed by or on behalf of
the fund.
Stakeholders recommended that guidance clarify the treatment of
charges not imposed by an investment fund, including custodial fees or
fees to cover the administrative and reporting costs associated with a
Trump account. One stakeholder pointed out that mutual fund account
fees would be treated as fees of the mutual fund, resulting in
differing treatment for mutual funds and ETFs. Another stakeholder
requested clarification that amounts paid for advice or planning
services are not subject to the 0.1 percent limit.
The 0.1 percent limit in section 530A(b)(3)(A)(iii) is part of the
definition of an eligible investment. The limit does not apply to
trustee fees. Therefore, custodial fees or similar charges that are
associated with a Trump account itself rather than with any particular
investment fund are analyzed as trustee fees, which are discussed later
in this preamble. If an account beneficiary pays an amount to an
advisor for advice on whether to open a Trump account or what
investment to select, and the advice and the amount are entirely
independent of any investment fund, then the amount is not within the
scope of the annual fees of an investment fund. Given the definition of
annual fees, a rule specifically excluding an amount having no
connection to any fund appears to be unnecessary and more likely to
confuse than clarify the definition. A sales load, however, is part of
a mutual fund's annual fees, even though the amount charged may
ultimately benefit a financial intermediary, because it is a cost of
investing in a particular investment fund.
Proposed Sec. 1.530A-3(f)(2)(iii) would provide that amounts
charged to an account beneficiary by a trustee for providing an account
are not treated as part of any investment fund's annual fees but as
trustee fees. A fee charged by a Trump account trustee or financial
intermediary for a service, such as carrying out a purchase or sale of
an investment fund is not considered a part of the investment fund's
fees if the fee is not charged on behalf of or at the direction of the
investment fund, is not paid (directly or indirectly) to the investment
fund, and is not attributable to any cost of offering the investment
fund. See part IV of this Explanation of Provisions regarding fees and
expenses charged by a Trump account trustee.
Q&A D-4 in Notice 2025-68 described a fund's annual expenses as the
amount set forth in its prospectus as total annual operating expenses.
Investment funds are already required to compute and report these
amounts. A fund's total annual operating expenses is also used to
compute the fund's expense ratio, which is a metric that is commonly
published and referred to in comparing investment funds. No comments
were received regarding the approach to annual expenses in the notice,
and proposed Sec. 1.530A-3(f)(3) would provide substantially the same
rule.
Proposed Sec. 1.530A-3(f)(3) would provide certain additional
clarifications to aid in the computation of a fund's total annual
operating expenses. These include that if an investment fund's
prospectus lists total operating expenses reduced by fee waivers or
expense reimbursements, the reduced amount applies for purposes of
section 530A(b)(3)(A)(iii). In addition, proposed Sec. 1.530A-3(f)(3)
would provide that if an investment fund has multiple share classes,
annual expenses are computed separately for each class, based on the
expenses and assets allocable to each class.
II. Trustee Procedures Regarding Eligible Investments
Section 530A(b)(1)(C)(iii) provides that the written governing
instrument creating a Trump account must meet the requirement that no
part of the account funds will be invested in any asset other than an
eligible investment during the growth period.
Q&A D-7 of Notice 2025-68 stated that a trustee must have
procedures in place to monitor and enforce the requirements of section
530A(b)(1)(C)(iii). The Q&A stated that it is not sufficient merely for
a written governing instrument of a Trump account to state the
prohibition of section 530A(b)(1)(C)(iii); the trustee must comply with
the prohibition. The Q&A stated that the procedures may, but are not
required to, be in the written governing instrument.
A stakeholder questioned whether there is authority for requiring
operational compliance with the eligible investment requirements for
Trump accounts. Section 530A(b)(1)(C) imposes limits by reference to
the written governing instrument of a Trump account, which cannot be
enforced by the IRS. Therefore, the stakeholder suggests any failure by
a trustee to follow the written governing instrument is a contractual
violation enforceable by the account beneficiary.
The Treasury Department and the IRS interpret the language of
section 530A(b)(1)(C) as requiring not just specific language to be
contained in the written governing instrument but also as requiring
operational compliance with the language set forth in the written
governing instrument. The trustee is in the best position to ensure
that an account meets requirements of section 530A(b)(1)(C), which
concern contributions, distributions, and investments. Thus, the
trustee must structure its operations to ensure the account meets the
requirements. Without such an operational compliance requirement, the
written instrument is not, in fact, the written governing instrument.
This approach of requiring operational compliance with Code
requirements in the written governing instrument is consistent with how
the Treasury Department and the IRS have interpreted statutory rules
for section 401(a) plans that, on their face, could be read to suggest
only a requirement that needs to be set forth in a plan document. For
example, section 401(a)(9) provides that ``[a] trust shall not
constitute a qualified trust under this subsection unless the plan
provides that the entire interest of each employee'' will be
distributed in accordance with section 401(a)(9)(A) (emphasis added).
The Treasury Department and the IRS have interpreted this language as
requiring operational compliance in order to maintain qualified plan
status under section 401(a).
Proposed Sec. 1.530A-3(g) would provide procedures for a trustee
to follow to ensure that Trump account funds are invested in accordance
with section 530A(b)(1)(C)(iii), including for selection of eligible
investments and default eligible investments, situations in which funds
temporarily need not be invested in an eligible investment, and
monitoring of investment funds. Many of these procedures involve an
account beneficiary, who generally will have
[[Page 54286]]
another person acting on their behalf while they are a minor.
Proposed Sec. 1.530A-3(g)(2) would provide that the written
governing instrument must include the procedures described in proposed
Sec. 1.530A-3(g)(4), (5), and (7). Proposed Sec. 1.530A-3(g)(3) would
clarify that if an account does not comply with section
530A(b)(1)(C)(iii), taking into account the flexibility added by
proposed Sec. 1.530A-3(g), the account will cease to be a Trump
account and cease to be an IRA.
Q&A D-7 of Notice 2025-68 also stated that these procedures with
respect to the growth period must include at least that the trustee
must offer only eligible investments as investment options for a Trump
account, and the trustee must select a default eligible investment and
must promptly invest any uninvested funds in the default eligible
investment, unless directed by or on behalf of the account beneficiary
to invest the funds in a different eligible investment.
Stakeholders sought clarification regarding default eligible
investments, including whether a trustee may have only one default
eligible investment, whether any eligible investment may be the default
eligible investment, and whether an account beneficiary may specify
another eligible investment as the designated eligible investment for
that particular account beneficiary.
Proposed Sec. 1.530A-3(g)(4)(i) would provide that a trustee must
limit investments available for Trump account investments to investment
funds that the trustee has determined are eligible investments.
Proposed Sec. 1.530A-3(g)(4)(ii) would provide that a trustee must
establish for each Trump account under the trustee's administration a
default eligible investment in which all contributions, proceeds from
sales or other dispositions, and any other amounts for investment
(other than amounts addressed by proposed Sec. 1.530A-3(g)(4)(iii))
will be invested unless the account beneficiary specifies that the
Trump account be invested in a different eligible investment for the
contribution or other amount. Proposed Sec. 1.530A-3(g)(4)(ii) also
would provide that the default eligible investment can be a single
eligible investment or a combination of eligible investments in
specified proportions, and that the default eligible investment(s) must
be clearly disclosed to account beneficiaries. Proposed Sec. 1.530A-
3(g)(4)(ii) would provide that the requirement to establish a default
eligible investment does not preclude arrangements between a trustee
and the account beneficiary that give effect to different preferences
on an ongoing basis.
Proposed Sec. 1.530A-3(g)(4)(iii) would provide that the trustee
of a Trump account must disclose to the account beneficiary how amounts
received as dividends or other distributions from eligible investments
will be invested unless the account beneficiary gives different
instructions regarding the dividends and distributions. For example,
amounts received as dividends and distributions might be reinvested in
the same eligible investments that paid the dividends or other
distributions or invested in the Trump account's default eligible
investment. Proposed Sec. 1.530A-3(g)(4)(iii) would also provide that
the trustee may give effect to directions from the account beneficiary
that a specific distribution, or distributions generally, be invested
in a different way that complies with section 530A(b)(1)(C)(iii).
Q&A D-8 of Notice 2025-68 stated that, during the growth period,
the trustee's procedures may not permit funds in a Trump account to be
invested in a money market fund but may permit an amount received as a
contribution, a dividend or other distribution from an eligible
investment, or an amount received as a result of a disposition (such as
sale) of an eligible investment, to be held in cash for the time
reasonably necessary to complete the investment of the amount in an
eligible investment.
Stakeholders recommended that amounts should be permitted to be
held in cash for the time reasonably necessary to complete a
distribution, rollover, or payment of fees. Proposed Sec. 1.530A-
3(g)(5)(i) would provide that a trustee may permit an amount received
in a Trump account as cash, such as an amount received as a
contribution, proceeds of a sale or other disposition, or a
distribution, to be held in cash for the time reasonably necessary to
complete an investment, reinvestment, distribution, rollover, payment
of fees, or other transaction permitted under section 530A.
Q&A D-9 of Notice 2025-68 stated that, during the growth period,
the trustee's procedures must require reasonable ongoing monitoring by
the trustee regarding whether a fund held by a Trump account continues
to be an eligible investment. This Q&A also stated that in the event
that a fund held by a Trump account ceases to be an eligible investment
during the growth period, the Trump account will no longer be permitted
to be invested in such fund.
Stakeholders made a variety of recommendations and sought
clarification with respect to the trustee's obligation to monitor the
status of its existing investments as eligible investments. These
recommendations include providing a safe harbor regarding when a
trustee would be treated as satisfying its obligations relating to
monitoring investment funds. For example, one stakeholder recommended
that trustee monitoring be based on periodic review and reliance on
public disclosures. Stakeholders also recommended a 120-day grace
period for a fund to regain eligible investment status (by, for
example, adjusting its fees and expenses) or for the trustee to dispose
of shares in the fund and reinvest the proceeds in an eligible
investment.
The Treasury Department and the IRS recognize that day-to-day
monitoring by a trustee regarding whether an investment fund continues
to be an eligible investment raises significant practical concerns. The
Treasury Department and the IRS agree with stakeholders that a safe
harbor requiring trustees to make periodic determinations regarding
eligible investment status would be more administrable for trustees.
Proposed Sec. 1.530A-3(g)(6) would require that the trustee's
procedures provide for monitoring of investment funds in which the
trustee's Trump accounts are invested, with an initial determination
whether the investment fund is an eligible investment when the trustee
first offers the investment fund to any Trump account for which it is
the trustee and then subsequent periodic determinations that the
investment fund continues to be an eligible investment. Proposed Sec.
1.530A-3(g)(6) would provide that the trustee may rely on an investment
fund's prospectus and other public documents required by Federal
securities laws in making determinations of eligible investment status.
Proposed Sec. 1.530A-3(g)(6) would also provide that a trustee is
treated as monitoring investment funds in which the trustee's Trump
accounts are invested if the trustee's periodic determinations occur at
least once every 12 months.
Proposed Sec. 1.530A-3(g)(5)(ii) would provide that in the event
an investment fund ceases to be an eligible investment, the trustee's
procedures must require the prompt sale or disposition of shares in the
investment fund and the reinvestment of the proceeds in an eligible
investment. Specifically, proposed Sec. 1.530A-3(g)(5)(ii)(A) would
provide that a trustee must sell or dispose of shares in the investment
fund and reinvest the proceeds within 30 days of when the investment
fund
[[Page 54287]]
ceases to be an eligible investment. Proposed Sec. 1.530A-
3(g)(5)(ii)(B) would provide that the time when an investment fund is
treated as ceasing to be an eligible investment is determined based on
whether the trustee is in compliance with the monitoring and periodic
determination requirements in proposed Sec. 1.530A-3(g)(6). If the
trustee is not in compliance with the monitoring and periodic
determination requirements in proposed Sec. 1.530A-3(g)(6), the
investment fund is treated as ceasing to be an eligible investment on
the first day that the investment fund does not meet the requirements
to be an eligible investment. If the trustee is in compliance with the
monitoring and periodic determination requirements of proposed Sec.
1.530A-3(g)(6), the time of the trustee's next periodic determination
in accordance with proposed Sec. 1.530A-3(g)(6) or, if earlier, the
time that the trustee acquires actual knowledge that the investment is
no longer an eligible investment, is treated as the time the investment
fund ceases to be an eligible investment. This provision is intended to
address concerns regarding the timing of identifying and then disposing
of shares in an investment fund expressed in stakeholders' requests for
specific time thresholds for dispositions.
Stakeholders discussed what notice a trustee should be required to
provide to an account beneficiary when an investment fund in which the
account beneficiary's funds are invested ceases to be an eligible
investment. One stakeholder contemplated notice to an account
beneficiary before the trustee reinvests the proceeds from the sale of
the fund that ceases to be an eligible investment. The Treasury
Department and the IRS believe that requiring notice before
reinvestment unnecessarily slows down reinvestment. Proposed Sec.
1.530A-3(g)(5)(ii) would not require notice to account beneficiaries
before selling or disposing of shares in the investment fund but would
require notice to account beneficiaries after reinvestment of the
proceeds about how the proceeds are reinvested.
Proposed Sec. 1.530A-3(g)(7) would provide that if a trustee has
adopted the required procedures but a portion of the assets in a Trump
account is not invested in an eligible investment due to an
administrative error by the trustee (for example, due to an oversight
or mistake in applying the procedures), the trustee must sell or
dispose of the assets that are not invested in an eligible investment
and reinvest the proceeds in an eligible investment within 30 calendar
days from the first day that portion was not invested in an eligible
investment. Furthermore, the trustee must disclose to the account
beneficiary the duration of the error, the assets that were held during
the error period, and the amount reinvested in an eligible investment
at the end of the error period.
Regarding the proposed correction of administrative errors, the
Treasury Department and the IRS are considering providing a rule that
would allow a trustee, in the case of its administrative error, to
replace, to the extent needed, earnings in the account that the account
would have had if the account had been properly invested in an eligible
investment. Such replaced earnings would not be considered
contributions subject to the contribution limitation under section
530A(c)(2). Comments are requested regarding such a rule.
The Treasury Department and the IRS recognize the importance of
helping account beneficiaries receive the benefits of a Trump account,
particularly because account beneficiaries are minors. Therefore, in
addition to the proposed correction procedures included in these
proposed regulations, the Treasury Department and the IRS request
comments regarding other failures under section 530A(b)(1)(C) that may
be appropriate for correction and proposed corrections for such
failures (taking into account that trustees must have procedures in
place to prevent most such failures). The Treasury Department and the
IRS intend to provide additional correction procedures for trustees, as
needed, to correct certain Trump account failures. Comments are
additionally requested regarding whether potential Trump account
corrections should be included as part of the IRA correction procedure
authorized under section 305(c) of Public Law 117-328, 136 Stat. 4459
(December 29, 2022), commonly referred to as the SECURE 2.0 Act.
Q&A D-10 of Notice 2025-68 stated that a trustee may permit funds
in a Trump account to be invested in multiple eligible investments. The
Treasury Department and the IRS confirm that a Trump account may be
invested in any number of eligible investments, and proposed Sec.
1.530A-3(g)(1) would provide that Trump account funds may be invested
in one or more eligible investments.
III. Request for Comments Regarding Stock Contributions as Part of a
Philanthropic Contribution
The Treasury Department and the IRS intend to exercise regulatory
authority conferred by section 530A(a) to issue regulations that would
allow contributions of readily tradable public company stock to be made
to Trump accounts as part of a philanthropic contribution. The
regulations would require that the stock transferred to the Treasury
Department for this purpose must satisfy certain criteria and other
requirements to be treated as a charitable contribution. All other
contributions to Trump accounts would continue to have to be made in
cash pursuant to section 408(a)(1), and such funds would continue to be
subject to the requirement in section 530A(b)(1)(C)(iii) that they
cannot be invested in any asset other than an eligible investment
during the growth period.
IV. Request for Comments Regarding Trustee Fees
Section 530A is intended to promote long-term investing for the
benefit of children. Section 530A contains provisions designed to
maintain a low cost for these accounts. In particular, section
530A(b)(3)(A)(iii) limits eligible investments to those with low annual
fees and expenses and section 530A(g) permits the Secretary to take
into account costs imposed by the trustee on the account or the account
beneficiary when selecting the trustee. Additionally, commenters and
other stakeholders have expressed concerns with the potential for fees
and expenses to diminish the account balances over time (especially
given the small initial balances and long expected holding periods).
One commenter raised the concept of expressly prohibiting additional
fees because such fees are not contemplated in the statutory language.
The Treasury Department and the IRS are considering ways to keep
costs down for these accounts, and request comments on alternative ways
in which this might be achieved, including the possibility of
prohibiting trustees from charging any fees with respect to the account
beneficiary or the eligible investments held by the account
beneficiary.
Proposed Applicability Dates
The regulations are proposed to apply to taxable years beginning on
or after January 1, 2026, except for paragraph (g) of the regulations,
which is proposed to apply to taxable years beginning on or after the
date of publication of the Treasury decision adopting these rules as
final regulations in the Federal Register (finalization date). In
accordance with section 7805(b)(2) of the Code, the Treasury Department
and the IRS intend to publish final regulations within 18 months of the
date of enactment of section 530A. A taxpayer or a trustee may rely on
the
[[Page 54288]]
proposed regulations for taxable years beginning before the
finalization date if the taxpayer or trustee, respectively, follows
these proposed regulations in their entirety and in a consistent
manner.
Special Analyses
I. Regulatory Planning and Review
Executive Orders 12866 and 13563 direct agencies to assess costs
and benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net benefits
(including potential economic, environmental, public health and safety
effects, distributive impacts, and equity). Executive Order 13563
emphasizes the importance of quantifying both costs and benefits,
reducing costs, harmonizing rules, and promoting flexibility.
The proposed regulations have been designated by the Office of
Management and Budget's (OMB's) Office of Information and Regulatory
Affairs (OIRA) as subject to review under Executive Order 12866
pursuant to the Memorandum of Agreement (MOA, July 4, 2025) between the
Treasury Department and the OMB regarding review of tax regulations.
OIRA has determined that the proposed rulemaking is significant under
section 3(f) of Executive Order 12866 and subject to review under
Executive Order 12866 and section 1(b) of the MOA. Accordingly, the
proposed regulations have been reviewed by OMB. This proposed rule is
not expected to be considered a regulatory action under Executive Order
14192 because it does not impose any more than de minimis regulatory
costs.
Need for Regulation
The proposed regulations would provide guidance relating to
eligible investments for Trump accounts under section 530A. The
proposed regulations would define terms related to eligible
investments, provide rules for determining whether an investment fund
is an eligible investment, and provide procedures for a trustee of a
Trump account to ensure that a Trump account meets requirements
concerning eligible investments.
The Statute and the Proposed Regulations
Public Law 119-21, commonly referred to as the One, Big, Beautiful
Bill Act, added new sections 530A, 128, and 6434 to the Code. Section
530A describes Trump accounts, section 128 describes certain employer
contributions to Trump accounts, and section 6434 describes the Trump
accounts contribution pilot program. The proposed regulations provide
guidance on eligible investments in a Trump account under section
530A(b)(3).
Section 530A defines a Trump account as an IRA with some special
rules. Most special rules that distinguish Trump accounts from other
IRAs apply only during the growth period. The first day of the growth
period is the day the account is established, and the final day of the
growth period is December 31 of the calendar year in which the account
beneficiary attains age 17. The rules for traditional IRAs generally
apply after the growth period. A Trump account may be established for
the benefit of a child prior to the calendar year in which the child
attains age 18 if the child has been issued a social security number.
In general, distributions from Trump accounts are not permitted
during the growth period. The entire balance of a Trump account may be
rolled over in a direct trustee-to-trustee transfer to a new Trump
account of the account beneficiary. The entire balance of a Trump
account may be rolled over in a direct trustee-to-trustee transfer to
an ABLE account of the account beneficiary in the calendar year the
account beneficiary attains age 17.
Funds in a Trump account may only be invested in eligible
investments during the growth period. An eligible investment generally
is a mutual fund or ETF that tracks an equity index of primarily U.S.
companies, such as the S&P 500 index, does not use leverage, and has
annual fees and expenses of no more than 0.1 percent of the balance of
the investment in the fund.
Trump accounts may receive contributions from nonprofits,
governments, employers, and individuals. In general, contributions to a
Trump account are subject to an annual limit of $5,000, adjusted for
inflation.
Governments and nonprofits may make qualified general contributions
through the Treasury Department, and such contributions must be
allocated in equal amounts to the Trump accounts of every account
beneficiary in a qualified class. Qualified general contributions from
governments and nonprofits through the Treasury Department do not count
towards the $5,000 annual contribution limit.
Section 128 sets rules for certain employer contributions to Trump
accounts. Employers may contribute to the Trump account of an employee
or an employee's dependent. Section 128 employer contributions to a
Trump account are excluded from the employee's income, up to an annual
limit of $2,500, adjusted for inflation. Section 128 employer
contributions count towards the $5,000 annual contribution limit.
Section 6434 describes the Trump accounts contribution pilot
program. In the pilot program, the Secretary will pay $1,000 to the
Trump accounts of eligible children. A U.S. citizen born in 2025, 2026,
2027, or 2028 who has been issued a social security number and for whom
no request for a pilot program contribution has previously been
processed is eligible for a pilot program contribution. Pilot program
contributions do not count towards the $5,000 annual contribution
limit.
All other contributions to a Trump account, including contributions
from friends or family members, are non-deductible contributions (they
create investment in the contract) and count towards the $5,000 annual
contribution limit.
The proposed regulations (Sec. 1.530A-3) are just one piece of the
implementation of section 530A; prior guidance addressed the election
to open an initial Trump account (Sec. 1.530A-1), and future guidance
will address other issues (Sec. Sec. 1.530A-2, 1.530A-4, 1.530A-5, and
1.530A-6). The proposed regulations would define the following terms
for the purposes of implementing section 530A: ETF, mutual fund, and
investment fund. For implementing section 530A, the definition of ETF
is taken from 17 CFR 270.6c 11(a)(1), modified to include entities that
operate in substantially the same manner. For implementing section
530A, the definition of mutual fund is taken from 15 U.S.C. 80a-
5(a)(1), modified to exclude ETFs. An investment fund is an ETF or a
mutual fund.
The proposed regulations would provide rules for determining
whether an investment fund is an eligible investment. The rules would
clarify that an investment fund (1) tracks the returns of an index if
it seeks to provide investment results that replicate the performance
of the index and the fund holds investments that are reasonably
expected to accomplish that objective, (2) uses leverage if it uses
borrowings, derivatives, or other strategies that are economically
equivalent to borrowings in a way that materially increases the risk of
loss associated with an investment in the fund, and (3) is not an
eligible investment if it charges annual fees and annual expenses of
more than 0.1% of the net value of its assets. The rules would clarify
that an investment fund is not an eligible investment if it corresponds
to the returns of an ESG
[[Page 54289]]
index. The rules would clarify that, to be a qualified index, an index
(1) must have a publicly available index methodology, (2) must not
include a stock or similar ownership interest based on the industry of
the issuing company, and (3) must be comprised of stocks and interests
in companies that are primarily domestic under section 7701(a)(4). The
rules would provide a safe harbor that an index with at least 90
percent U.S. companies by index weight is considered to be primarily
U.S. companies.
The proposed regulations would provide procedures for a trustee of
a Trump account to ensure that funds are invested in an eligible
investment. A trustee would be required to ensure that investment funds
available for a Trump account are eligible investments and that
contributions to a Trump account are invested in an eligible investment
by default. A trustee would generally be required to ensure that an
investment fund held by a Trump account that ceases to be an eligible
investment is disposed and the proceeds reinvested in an eligible
investment within 30 days of ceasing to be an eligible investment.
However, if a trustee makes periodic determinations of whether an
investment fund is an eligible investment based on public documents at
least once every 12 months, then the trustee would generally be
permitted to rely on the periodic determinations, and the trustee would
be required to ensure that an investment fund that ceases to be an
eligible investment is disposed and the proceeds reinvested within 30
days of the periodic determination.
Baseline
The Treasury Department and the IRS have assessed the benefits and
costs of the proposed regulations relative to a no-action baseline
reflecting anticipated Federal income tax-related behavior in the
absence of these proposed regulations.
Affected Entities and Taxpayers
The proposed regulations are expected to affect 85 million children
in 44 million families.
Economic Effects of the Proposed Regulations
Share of U.S. Equities
The proposed regulations would clarify how to apply the statutory
requirement that investment funds held by Trump accounts track the
returns of an index of equities in ``primarily'' U.S. companies. The
proposed regulations would provide a safe harbor that an index with at
least 90 percent U.S. companies by index weight is considered to be
``primarily'' U.S. companies. Alternatives would be to provide a safe
harbor with a different percentage or no safe harbor. The 90 percent
threshold is low enough to accommodate temporary changes in indexes
that are generally designed to track the returns of U.S. companies and
high enough to clearly align with the statutory language. A safe harbor
gives trustees the legal certainty they need to provide appropriate
investment fund alternatives in Trump accounts.
The statute explicitly allows investment funds to track the
Standard & Poor's 500 (S&P 500) stock market index. The companies in
the S&P 500 ended 2025 with a market capitalization of $58 trillion.
There are many other indexes that satisfy the safe harbor. For example,
the Center for Research in Security Prices (CRSP) U.S. total market
index, which includes companies that ended 2025 with a market
capitalization of $65 trillion, and the Nasdaq Composite index, which
includes companies that ended 2025 with a market capitalization of $35
trillion. Trustees are likely to act cautiously by choosing indexes
that do not approach the safe harbor, so the impact of the safe harbor
relative to a slightly different percentage or no safe harbor is likely
small.
Assessment Frequency
The proposed regulations would clarify how often a trustee must
determine whether an investment fund held by Trump accounts is an
eligible investment. The proposed regulations would allow a trustee to
rely on periodic determinations of whether an investment fund is an
eligible investment based on public documents if the trustee makes the
periodic determinations at least once every 12 months. Alternatives
would be to require assessment more frequently, such as quarterly, or
to require continuous monitoring. An annual determination is frequent
enough to identify changes in fund or index eligibility, while avoiding
a continuous-monitoring requirement that could discourage trustees from
offering otherwise appropriate investment fund alternatives. A safe
harbor gives trustees the legal certainty they need to administer Trump
accounts without unnecessary compliance costs.
Annual assessment is consistent with other significant financial
reporting cycles. Public companies generally file one annual report on
Form 10-K each year. Public companies also generally file quarterly
reports on Form 10-Q for the first three fiscal quarters. Requiring
trustees to reassess fund eligibility more often than annually could
impose recurring review obligations that exceed what is necessary to
confirm that funds remain aligned with statutory requirements. Trustees
are likely to act cautiously by selecting funds and indexes that
clearly satisfy the requirements, so the impact of allowing annual
determinations relative to a more frequent requirement is likely small.
Disposal of Ineligible Investments
The proposed regulations would clarify how quickly a trustee must
ensure disposal of an investment fund held by Trump accounts after the
fund no longer satisfies the statutory requirements (or after a
periodic determination to that effect). The proposed regulations would
allow a Trump account not to lose its status as a Trump account if the
disposal occurs within 30 days. Alternatives would be to allow shorter
or longer remediation periods or not to allow any remediation. A 30-day
period is short enough to ensure that Trump accounts are not maintained
in ineligible investments for an extended period and long enough to
permit orderly trading and operational processing. A reasonable
remediation period gives trustees the legal certainty they need to
correct eligibility issues without forcing rushed transactions that may
be impractical or disadvantageous.
Correction periods in other retirement and tax contexts commonly
allow time for orderly correction rather than requiring immediate
action. For example, under IRS self-correction rules, many significant
retirement plan operational failures may be corrected before the end of
the third plan year after the year of the failure. The excise tax rules
for prohibited transactions also distinguish between an initial tax of
15 percent of the amount involved and an additional 100 percent tax if
the transaction is not corrected within the taxable period. Compared
with these longer correction frameworks, a 30-day disposal period is
relatively prompt. Trustees are likely to act cautiously by selecting
funds that clearly satisfy the requirements and by disposing of
ineligible investments soon after an issue is identified, so the impact
of the 30-day remediation period is likely small.
Prohibition on ESG Criteria
The proposed regulations would specify that an investment fund is
not an eligible investment for Trump accounts if it corresponds to the
returns of an ESG index. An alternative would be to permit funds that
track ESG indexes. Whether funds that track ESG indexes are available
or not in Trump
[[Page 54290]]
accounts has very little economic impact. A meta-analysis of ESG
studies found that ``ESG investing returns were generally
indistinguishable from conventional investing returns''.\2\ Demand for
ESG indexes is a small share of the market for passively managed funds.
At the end of 2025, U.S. passively managed mutual funds and ETFs held
$19.4 trillion in net assets while sustainable funds, including funds
that track ESG indexes, held $368 billion in net assets, according to
Morningstar.<SUP>3 4</SUP> Given the small percentage of assets
invested in funds that track ESG indexes, it is reasonable to believe
that most adults managing Trump accounts on behalf of children would
not have chosen investment funds that track ESG indexes even if they
were available.
---------------------------------------------------------------------------
\2\ Whelan, Tensie, et al. ESG and Financial Performance:
Uncovering the Relationship by Aggregating Evidence from 1,000 Plus
Studies Published between 2015-2020. NYU Stern Center for
Sustainable Business and Rockefeller Asset Management, 2021. <a href="https://www.stern.nyu.edu/sites/default/files/assets/documents/ESG%20Paper%20Aug%202021.pdf">https://www.stern.nyu.edu/sites/default/files/assets/documents/ESG%20Paper%20Aug%202021.pdf</a>.
\3\ Carter, David, and Jack Bullard. U.S. Fund Flows: December
2025. Morningstar, 2026. <a href="https://assets.contentstack.io/v3/assets/blt9415ea4cc4157833/bltb441ce3c78f39445/2025_US_Fund_Flows.pdf">https://assets.contentstack.io/v3/assets/blt9415ea4cc4157833/bltb441ce3c78f39445/2025_US_Fund_Flows.pdf</a>.
\4\ Bioy, Hortense, et al. Global Sustainable Fund Flows: Q4 and
Full-Year 2025 in Review. Morningstar Sustainalytics, 2026. <a href="https://assets.contentstack.io/v3/assets/blt9415ea4cc4157833/blt1d54e64f88b82b3b/Global_ESG_Flows_Q4_2025_Report.pdf">https://assets.contentstack.io/v3/assets/blt9415ea4cc4157833/blt1d54e64f88b82b3b/Global_ESG_Flows_Q4_2025_Report.pdf</a>.
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II. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) generally
requires that a Federal agency obtain the approval of the OMB before
collecting information from the public, whether such collection of
information is mandatory, voluntary, or required to obtain or retain a
benefit. An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless the
collection of information displays a valid control number.
The collections of information in these proposed regulations
contain third-party disclosure and recordkeeping requirements that are
necessary to ensure that no part of the account funds will be invested
in any asset other than an eligible investment during the growth period
as required under section 530A(b)(1)(C)(iii). These collections of
information generally would be used by the IRS for tax compliance
purposes and by account beneficiaries and trustees to ensure the
account qualifies as a Trump account.
This proposed regulation provides that beneficiaries can direct
trustees how to allocate funds among eligible investments. Clients
being able to allocate funds within their accounts is a usual and
customary business practice. Usual and customary business records are
incurred as a normal course of business activities and are excluded
from the definition of burden under 5 CFR 1320.3(b)(2).
The proposed regulation includes third-party disclosures and
associated recordkeeping requirements from trustees to account
beneficiaries (or ``legally responsible parties''). IRS is soliciting
feedback on these collection requirements and their associated burdens.
IRS anticipates that the likely respondents are businesses and for-
profit organizations. Table 1 provides a high-level description of the
collection requirements and the regulatory section that include
additional details. Table 2 provides the estimated burden placed on
trustees for each collection requirement.
Table 1--Description of Collections
----------------------------------------------------------------------------------------------------------------
Regulatory section
OMB control No. Collection type New or revised Description with additional
collection details
----------------------------------------------------------------------------------------------------------------
1545-NEW............. Third-party New.................... Written governing 26 CFR 1.530A-
Disclosure and instruments. 3(g)(2).
Recordkeeping.
1545-NEW............. Third-party New.................... Disclosure of a 26 CFR 1.530A-
Disclosure and default eligible 3(g)(4)(ii).
Recordkeeping. investment.
1545-NEW............. Third-party New.................... Disclosure of how 26 CFR 1.530A-
Disclosure and dividends are 3(g)(4)(iii).
Recordkeeping. invested.
1545-NEW............. Third-party New.................... Disclosure of a 26 CFR 1.530A-
Disclosure and reinvestment due to 3(g)(5)(ii).
Recordkeeping. investment
ineligibility.
1545-NEW............. Third-party New.................... Disclosure of a 26 CFR 1.530A-
Disclosure and reinvestment due to 3(g)(7).
Recordkeeping. administrative
error.
1545-NEW............. Recordkeeping....... New.................... Periodic 26 CFR 1.530A-
determinations of 3(g)(6).
account eligibility.
----------------------------------------------------------------------------------------------------------------
[[Page 54291]]
Table 2--Estimated Burden
----------------------------------------------------------------------------------------------------------------
Estimated Estimated Estimated
Collection number of frequency of Estimated average annual total annual
respondents responses burden per response burden hours
----------------------------------------------------------------------------------------------------------------
26 CFR 1.530A-3(g)(2), 4,600 1 40 hours..................... 184,000
(g)(4)(ii), (g)(4)(iii)--Draft
the written governing
instruments and related
disclosures (start-up/one time
burden).
26 CFR 1.530A-3(g)(2)--Obtaining 4,600 27,717 1 minute..................... 2,124,970
consent on written governing
instruments.
26 CFR 1.530A-3(g)(6)--Periodic 4,600 3 8 hours...................... 110,400
determination of eligible
investments.
26 CFR 1.530A-3(g)(4)(ii)-- 4,600 27,717 1 minute..................... 2,124,970
Sending disclosure notice.
26 CFR 1.530A-3(g)(4)(iii)-- 4,600 27,717 1 minute..................... 2,124,970
Sending disclosure notice.
26 CFR 1.530A-3(g)(5)(ii)-- 1 27,717 1 minute..................... 462
Sending disclosure notice \5\.
26 CFR 1.530A-3(g)(7)--Sending 1 27,717 1 minute..................... 462
disclosure notice \5\.
----------------------------------------------------------------------------------------------------------------
The collections contained in this notice of proposed rulemaking
have been submitted to the Office of Management and Budget for review
in accordance with the Paperwork Reduction Act under OMB Control Number
1545-NEW. Commenters are strongly encouraged to submit public comments
electronically. Written comments and recommendations for the proposed
information collection should be sent to <a href="http://www.reginfo.gov/public/do/PRAMain">www.reginfo.gov/public/do/PRAMain</a>, with copies to the Internal Revenue Service. Find this
particular information collection by selecting ``Currently under
Review--Open for Public Comments'' then by using the search function.
Submit electronic submissions for the proposed information collection
to the IRS via email at <a href="/cdn-cgi/l/email-protection#760604175815191b1b13180205361f040558111900"><span class="__cf_email__" data-cfemail="49393b28672a2624242c273d3a09203b3a672e263f">[email protected]</span></a> (indicate CC-00349938-26
on the Subject line). Comments on the collection of information should
be received by October 20, 2026.
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\5\ Disclosure events for ineligible investments are expected to
occur extremely infrequently. In any given year, it's anticipated
that less than 1% of trustees will need to issue a particular
disclosure. Sending the disclosures is anticipated to be done
electronically and be minimal burden on the trustee.
---------------------------------------------------------------------------
Comments are specifically requested concerning: (a) Whether the
proposed collection of information is necessary for the proper
performance of the functions of the IRS, including whether the
information will have practical utility; (b) the accuracy of the
estimated burden associated with the proposed collection of
information; (c) how the quality, utility, and clarity of the
information to be collected may be enhanced; (d) how the burden of
complying with the proposed collection of information may be minimized,
including through the application of automated collection techniques or
other forms of information technology; and (e) estimates of capital or
start-up costs and costs of operation, maintenance, and purchase of
services to provide information.
III. Regulatory Flexibility Act
The Secretary hereby certifies that these proposed regulations
would not have a significant economic impact on a substantial number of
small entities pursuant to the Regulatory Flexibility Act (5 U.S.C.
chapter 6). The proposed rules would not impose a significant economic
impact on any regulated entities because the regulation's economic
impact on entities is generally limited to requiring procedures to be
set up by the trustee to ensure compliance with the statute and the
regulation, language in the written governing instrument, requiring
disclosure of the default eligible investment and how dividends will be
invested (or any changes thereto), making periodic (likely annual)
determinations that investments are still eligible investments, and
rare disclosures if a reinvestment has occurred because of an
ineligible investment. Because these requirements are either one-time,
rare, or limited to internal determinations, any economic impact is
expected not to be significant. Additionally, the proposed regulations
affect only trustees of Trump accounts, which generally should not
include small entities and therefore should not affect a substantial
number of small entities. Therefore, a Regulatory Flexibility Act
analysis is not required.
Notwithstanding this certification, the Treasury Department and the
IRS invite comments on the impacts these proposed regulations may have
on small entities.
IV. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits and take
certain other actions before issuing a final rule that includes any
Federal mandate that may result in expenditures in any one year by a
State, local, or Tribal government, in the aggregate, or by the private
sector, of $100 million in 1995 dollars, updated annually for
inflation. These proposed regulations do not include any Federal
mandate that may result in expenditures by State, local, or Tribal
governments, or by the private sector in excess of that threshold.
V. Executive Order 13132: Federalism
Executive Order 13132 (Federalism) prohibits an agency from
publishing any rule that has federalism implications if the rule either
imposes substantial, direct compliance costs on State and local
governments, and is not required by statute, or preempts State law,
unless the agency meets the consultation and funding requirements of
section 6 of the Executive order. These proposed regulations do not
have federalism implications and do not impose substantial direct
compliance costs on State and local governments or preempt State law
within the meaning of the Executive order.
VI. Small Business Administration
Pursuant to section 7805(f) of the Code, this notice of proposed
rulemaking will be submitted to the Chief Counsel for the Office of
Advocacy of the Small Business Administration for comment on its impact
on small business.
Comments and Request for a Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any comments that are submitted timely
to the IRS as prescribed in this preamble under the ADDRESSES heading.
The Treasury Department and the IRS request comments on all aspects of
the proposed regulations. Any comments submitted will be made available
at <a href="https://www.regulations.gov">https://www.regulations.gov</a> or upon
[[Page 54292]]
request. A public hearing will be scheduled if requested in writing by
any person who submits electronic or written comments. Requests for a
public hearing are also encouraged to be made electronically. If a
public hearing is scheduled, notice of the date and time for the public
hearing will be published in the Federal Register.
Statement of Availability of IRS Documents
IRS Revenue Rulings, Revenue Procedures, Notices, and other
guidance cited in this document are published in the Internal Revenue
Bulletin (or Cumulative Bulletin) and are available from the
Superintendent of Documents, U.S. Government Publishing Office,
Washington, DC 20402, or by visiting the IRS website at <a href="https://www.irs.gov">https://www.irs.gov</a>.
Drafting Information
The principal author of these proposed regulations is Justin R.
Karlin of the Office of Associate Chief Counsel (Financial Institutions
and Products). However, other personnel from the Treasury Department
and the IRS also participated in its development. For further
information about these proposed regulations, contact Mr. Karlin at
(202) 317-6842 (not a toll-free number).
Lists of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, the Treasury Department and the IRS propose to amend
26 CFR part 1 as follows:
PART 1--INCOME TAXES
0
Paragraph 1. The authority citation for part 1 is amended by adding an
entry for Sec. 1.530A-3 in numerical order to read as follows:
Authority: 26 U.S.C. 7805 * * *
* * * * *
Section 1.530A-3 also issued under 26 U.S.C. 530A(b)(3)(A)(iv)
and (g)(3).
* * * * *
0
Par. 2. Section 1.530A-3 is added to read as follows:
Sec. 1.530A-3 Trump accounts--Eligible investments.
(a) Overview. Under section 530A(b)(1)(C)(iii), for an account to
qualify as a Trump account, the written governing instrument creating
the account may not permit any part of the account funds to be invested
in any asset other than an eligible investment during the period that
begins when the initial Trump account is established and ends on
December 31 of the calendar year in which the account beneficiary
attains age 17 (the growth period). Paragraph (b) of this section
provides definitions related to eligible investments. Paragraph (c) of
this section provides rules regarding whether an investment fund tracks
the returns of an index. Paragraph (d) of this section provides rules
regarding whether an investment fund uses leverage. Paragraph (e) of
this section provides rules related to qualified indices. Paragraph (f)
of this section provides rules for determining whether an investment
fund has annual fees and expenses within the 0.1 percent limit.
Paragraph (g) of this section provides procedures for a trustee of a
Trump account (trustee) to ensure that no part of the account funds
will be invested in any asset other than an eligible investment.
Paragraph (h) of this section provides the applicability date of this
section.
(b) Definitions. The following definitions apply for purposes of
section 530A and this section:
(1) Eligible investment. The term eligible investment means any
mutual fund or exchange traded fund that tracks the returns of a
qualified index, does not use leverage, does not have annual fees and
expenses of more than 0.1 percent of the balance of the investment in
the fund, and meets such other criteria as the Secretary of the
Treasury or the Secretary's delegate (Secretary) determines appropriate
for purposes of section 530A.
(2) Exchange traded fund (ETF). The term exchange traded fund (ETF)
means a domestic corporation (including a regulated investment company
(RIC)) that is registered under the Investment Company Act of 1940,
Public Law 76-768, 54 Stat. 789 (the 1940 Act), as amended, and that is
either--
(i) An ``exchange-traded fund'' as defined for purposes of the 1940
Act in 17 CFR 270.6c-11(a)(1); or
(ii) An entity that operates in substantially the same manner as an
exchange-traded fund but that is not described in 17 CFR 270.6c-
11(a)(1), such as a unit investment trust or ETF share class of a
mutual fund operating as an ETF under exemptive relief granted by the
Securities and Exchange Commission.
(3) Investment fund. The term investment fund means a mutual fund
or an ETF.
(4) Mutual fund. The term mutual fund means a domestic corporation
(including a RIC) that is registered under the 1940 Act as an open-end
company (as defined in 15 U.S.C. 80a-5(a)(1)) and that is not an ETF.
(5) Qualified index. The term qualified index means the Standard
and Poor's 500 stock market index, or any other index that is comprised
of equity investments in primarily United States companies and for
which regulated futures contracts (as defined in section 1256(g)(1))
are traded on a qualified board or exchange (as defined in section
1256(g)(7)). A qualified index does not include any industry or sector-
specific index but may include an index based on market capitalization.
Paragraph (e) of this section provides rules for determining whether an
index is a qualified index.
(6) Regulated investment company (RIC). The term regulated
investment company (RIC) means a regulated investment company within
the meaning of section 851(a).
(c) Tracking the returns of an index--(1) In general. For purposes
of section 530A(b)(3)(A)(i) and this section, an investment fund tracks
the returns of an index if the fund's investment objective is to seek
to provide investment results that, before fees and expenses, replicate
the performance of the index, and the fund holds investments that are
reasonably expected to accomplish that objective. For example, a fund
may track the returns of an index by holding shares of most or all of
the stocks that are constituents of the index in proportion to the
stocks' weightings in the index. An investment fund does not fail to
track the returns of an index merely because the returns from the fund
are affected by fees, expenses, trading costs, variations arising from
buying and selling securities when the index changes, and similar
variations incidental to operating a fund that seeks to replicate the
performance of an index.
(2) Investment funds that do not track the returns of an index.
Except as provided in paragraph (c)(3) of this section, an investment
fund does not track the returns of an index if the fund uses one or
more strategies to outperform or otherwise perform differently from the
index. Thus, an investment fund that, in some or all market conditions,
uses any strategy to decrease or increase the volatility, risk, or
current income associated with the index does not track the returns of
the index. For example, an investment fund that owns shares of each
stock that is a component of an index and sells covered calls on some
or all of those shares does not track the returns of the index, because
the fund's strategy diminishes the fund's participation in the
potential appreciation in the shares and increases the fund's current
income.
[[Page 54293]]
An investment fund that seeks to provide investment results consistent
with the return on several different indices does not track the returns
of an index.
(3) Securities lending. An investment fund does not fail to track
the returns of an index because the investment fund engages in
securities lending transactions so long as the investment fund retains
full economic exposure to the securities.
(d) Does not use leverage--(1) In general. For purposes of section
530A(b)(3)(A)(ii) and this section, an investment fund that references
an index is considered to use leverage if the fund uses borrowings,
derivatives, or other strategies that are economically equivalent to
borrowings in a way that materially increases the risk of loss
associated with an investment in the investment fund (as compared to an
investment in a fund that holds the index components physically and
that does not borrow or use derivatives). Thus, an investment fund uses
leverage if, as a result of borrowings or derivatives or another
economic equivalent, a change in the level of the index the returns of
which the fund seeks to replicate tends to cause a materially greater
proportional change in the net value of the fund's portfolio. For
example, an investment fund is considered to use leverage if the fund
provides investment results that correspond to the performance of an
index multiplied by a number greater than one (regardless of whether
the fund uses borrowings, derivatives, or another economic equivalent
to provide such results).
(2) Permitted borrowings and derivatives. An investment fund is not
considered to use leverage merely because it borrows or uses
derivatives as part of its strategy to replicate the performance of an
index, so long as the borrowings or derivatives do not materially
increase the risk of loss associated with an investment in the
investment fund. Thus, an investment fund is not considered to use
leverage merely because the fund incurs short-term borrowings to
provide liquidity for redemptions or to purchase portfolio securities
in connection with investment flows into the fund or because the fund
uses derivatives to gain synthetic exposure to certain index
components. An investment fund's obligation to return collateral
received for securities lending transactions described in paragraph
(c)(3) of this section is not treated as leverage so long as the
investment fund takes appropriate steps to limit the risk of loss with
respect to the collateral. To limit the risk of loss with respect to
cash collateral, the investment fund must hold the collateral in cash
or in highly liquid, conservative positions (like money market funds).
To limit the risk of loss with respect to non-cash collateral, the
investment fund must not sell the collateral or otherwise use the
collateral (for example, by pledging it as collateral in another
transaction) to increase the fund's exposure to the index or other
assets.
(e) Qualified index--(1) In general. This paragraph (e) provides
rules to determine whether an index is a qualified index within the
meaning of section 530A(b)(3)(B) and paragraph (b)(5) of this section.
To be a qualified index, an index must have a publicly available index
methodology that describes the criteria for inclusion in the index and
the construction of the index. Whether an index meets the requirements
in this paragraph (e) is generally determined by reference to the index
methodology for the index.
(2) Industry-specific and sector-specific indices. For purposes of
section 530A(b)(3)(B) and paragraph (b)(5) of this section, an index is
industry-specific or sector-specific if inclusion of a stock or
interest in the index depends on the business or industry in which the
issuing company is engaged. Thus, any index that depends on industry
classification codes for inclusion of a company in the index is an
industry-specific or sector-specific index. Similarly, an index that
includes stocks of companies operating in several related industries or
sectors (such as hotels, air travel, and outdoor recreation) is an
industry-specific or sector-specific index.
(3) Other index-related criteria for eligible investments. Any
investment fund that corresponds to the returns of an environmental,
social, and governance (ESG) index is not an eligible investment. An
ESG index includes any index that has, or is marketed as having, a
focus on environmental, social, or governance factors. Any investment
fund that is marketed or sold as having an investment objective to
track an ESG index is not an eligible investment.
(4) Market capitalization. For purposes of section 530A(b)(3)(B)
and paragraph (b)(5) of this section, an index is based on market
capitalization if a condition for the inclusion of a company's stock
(or other ownership interests) in the index is that the company has a
market capitalization that is within a specified range or over or under
a specified threshold, or that meets specified ranking criteria.
Therefore, an index that meets the requirements to be a qualified index
in section 530A(b)(3)(B) and this paragraph (e) does not fail to be a
qualified index as a result of such a condition for inclusion.
(5) Equity investments. For purposes of section 530A(b)(3)(B) and
paragraph (b)(5) of this section, an index is considered to be
comprised of equity investments if the index is comprised entirely of
stocks and similar ownership interests in the form of partnership or
membership interests. An index is not comprised of equity investments
if it includes debt instruments, derivatives, or any other asset that
is not an ownership interest in a company.
(6) United States companies. For purposes of section 530A(b)(3)(B)
and paragraph (b)(5) of this section, United States companies (U.S.
companies) are companies that are domestic under section 7701(a)(4).
(7) Safe harbor for indices that include interests in foreign
companies. For purposes of section 530A(b)(3)(B) and paragraph (b)(5)
of this section, an index is comprised primarily of U.S. companies if
U.S. companies represent at least 90 percent of the index based on
their weightings in the index.
(f) Limit on annual fees and expenses--(1) In general. For purposes
of section 530A(b)(3)(A)(iii) and this section, an investment fund is
not an eligible investment if the sum of its annual fees (as described
in paragraph (f)(2) of this section) and annual expenses (as described
in paragraph (f)(3) of this section) is more than 0.1 percent of the
net value of its assets.
(2) Annual fees--(i) In general. Except as provided in the
following sentence, the amount of an investment fund's annual fees for
purposes of section 530A(b)(3)(A)(iii) and this section is the
aggregate amount of fees of the investment fund (as described in
paragraph (f)(2)(ii) of this section) imposed during the most recent
fiscal year (within the meaning of 17 CFR 210.1-02(k)) of the
investment fund the financial data from which has appeared in the
investment fund's prospectus, expressed as a percentage of the
investment fund's average net asset value during that fiscal year (or a
reasonable estimate). If an investment fund's most recent prospectus
discloses a change in the investment fund's fee structure that
increases the investment fund's aggregate annual fees, the computation
described in the preceding sentence must take into account the effect
of such increase (or a reasonable estimate). If an investment fund has
multiple share classes, annual fees are computed separately for each
class,
[[Page 54294]]
based on the fees that apply to that class and the assets allocable to
that class.
(ii) Fees of an investment fund. For purposes of section
530A(b)(3)(A)(iii) and this section, an investment fund's fees are all
of the amounts that the fund charges its investment fund holders
directly, without regard to how such amounts are computed, when they
are imposed, or how such amounts are referred to in securities filings
or marketing materials. Thus, fees include annual, periodic,
transactional, and other recurring amounts charged by an investment
fund. Fees also include amounts charged by an investment fund a single
time, such as upon a purchase or redemption of interests in the
investment fund. Fees include amounts expressed as a fixed dollar
amount, as a percentage of the amount invested, or on another basis. An
investment fund's fees are disclosed in the fund's prospectus, often
under the heading ``Shareholder Fees'' or ``Unitholder Fees'' in a fee
table.
(iii) Fees not associated with an investment fund. The 0.1 percent
limit on fees and expenses in section 530A(b)(3)(A)(iii) is a
requirement for an eligible investment and not for a Trump account.
Fees charged by a trustee for providing an account are not treated as
part of any investment fund's annual fees but as trustee fees. A fee
charged by a financial intermediary for a service, such as carrying out
a purchase or sale of an investment fund is not considered a part of
the investment fund's fees if the fee is not charged on behalf of or at
the direction of the investment fund, is not paid (directly or
indirectly) to the investment fund, and is not attributable to any cost
of offering the investment fund. A fee charged by a trustee for such a
service would also not be considered a part of the investment fund's
fees under this paragraph.
(3) Annual expenses. For purposes of section 530A(b)(3)(A)(iii) and
this section, the amount of an investment fund's annual expenses is the
amount set forth as the investment fund's total annual operating
expenses in its prospectus. The amount may be stated as a percentage of
the value of the investment fund holder's investment, or as a
percentage of the net value of the fund's net assets. If an investment
fund's prospectus lists total operating expenses reduced by fee waivers
or expense reimbursements, the reduced amount applies for purposes of
section 530A(b)(3)(A)(iii) and this section. If an investment fund has
multiple share classes, annual expenses are computed separately for
each class, based on the expenses and assets allocable to each class.
(g) Trustee's procedures regarding eligible investments--(1) In
general. To meet the requirement of section 530A(b)(1)(C)(iii), a
trustee must ensure that Trump account funds are invested only in one
or more eligible investments during the growth period. The trustee
satisfies that requirement by following the procedures provided in this
paragraph (g).
(2) Written governing instrument. The written governing instrument
creating a Trump account must include the procedures provided in
paragraphs (g)(4), (5), and (7) of this section.
(3) Consequences of failure. Except as otherwise provided in this
paragraph (g), if any funds of an account are invested in an asset
other than an eligible investment (ineligible investment) during the
growth period, then the account will cease to be a Trump account (and
thus will also cease to be an individual retirement account (IRA) under
section 408(a)) as of the first day the account holds the ineligible
investment. However, if any funds of an account are invested in an
asset that is an eligible investment at the time the asset is acquired
but that becomes an ineligible asset during the growth period, then the
account will cease to be a Trump account (and an IRA) as of the 30th
day after the day that the asset ceased to be an eligible investment
(taking into account paragraph (g)(5)(ii) of this section). If this
paragraph (g)(3) applies to cause an account to cease to be a Trump
account (and an IRA), then the account will be treated as if there were
a distribution on that day of an amount equal to the fair market value
of all of the assets in the account on that day. The preceding sentence
applies even if part of the fair market value of the account as of that
day is attributable to excess contributions that may otherwise be
returned tax-free under section 530A(d)(5).
(4) Selection of eligible investment and default eligible
investment--(i) Selection of eligible investments. A trustee must limit
the investment or investments available for a Trump account during the
growth period to investment funds that the trustee has determined are
eligible investments.
(ii) Default eligible investment. The trustee must establish for
each Trump account under the trustee's administration a default
eligible investment in which, during the growth period, all
contributions, proceeds from sales or other dispositions, and any other
amounts for investment (other than amounts addressed by paragraph
(g)(4)(iii) of this section) will be invested unless the account
beneficiary (as defined in section 530A(b)(4)) (or any person
authorized to act on behalf of the account beneficiary under the Trump
account's written governing instrument (the responsible party))
specifies a different eligible investment for the contribution or other
amount. The default eligible investment for a Trump account can be a
single eligible investment or a combination of eligible investments in
specified proportions and may be changed by the trustee from time to
time. The trustee must clearly disclose to each account beneficiary the
default eligible investment in effect upon the establishment of the
account and upon any subsequent change to the default eligible
investment. The requirement to establish a default eligible investment
does not preclude arrangements between the trustee and the account
beneficiary that give effect to different instructions on an ongoing
basis. For example, the trustee may follow instructions of an account
beneficiary (or responsible party) to invest all contributions or other
amounts for investment in that account beneficiary's account (or all
such amounts for which another instruction is not provided) in a
specified eligible investment other than the trustee's default eligible
investment.
(iii) Dividends and other investment fund distributions. The
trustee of a Trump account must disclose to the account beneficiary how
amounts received as dividends or other distributions from eligible
investments will be invested unless the account beneficiary (or
responsible party) gives different instructions regarding the dividends
and distributions. For example, amounts received as dividends and
distributions might be reinvested in the same eligible investments that
paid the dividends or other distributions or invested in the Trump
account's default eligible investment. The trustee may give effect to
directions from the account beneficiary (or responsible party) that a
specific distribution, or distributions generally, be invested in a
different way that complies with section 530A(b)(1)(C)(iii).
(5) Situations in which funds need not be invested in an eligible
investment--(i) Certain cash holdings. During the growth period, the
trustee may permit an amount received in a Trump account as cash, such
as an amount received as a contribution, proceeds of a sale or other
disposition, or a distribution, to be held in cash for the time
reasonably necessary to complete a transaction permitted under section
530A, including an investment, reinvestment, distribution of excess
contribution, qualified rollover contribution, or qualified ABLE
rollover contribution.
[[Page 54295]]
(ii) Ceasing to be an eligible investment--(A) In general. In the
event an investment fund that was an eligible investment (as determined
by the trustee as of the trustee's last determination date described in
paragraph (g)(6) of this section) then ceases to be an eligible
investment during the growth period, in order for the account to remain
a Trump account, the trustee must ensure the prompt sale or disposition
of shares in the investment fund and the reinvestment of the proceeds
consistent with paragraph (g)(4)(ii) of this section and disclose how
the proceeds were reinvested to the account beneficiary. A sale or
disposition of shares in the investment fund and the reinvestment of
the proceeds will be considered prompt if the sale or disposition and
reinvestment of the proceeds occur within 30 calendar days of the
investment fund ceasing to be an eligible investment.
(B) Time when a fund is treated as ceasing to be an eligible
investment. For purposes of this paragraph (g)(5)(ii), the time when
the investment fund is treated as ceasing to be an eligible investment
is determined based on whether the trustee is in compliance with the
monitoring and periodic determination requirements in paragraph (g)(6)
of this section.
(1) If the trustee is not in compliance with the monitoring and
periodic determination requirements of paragraph (g)(6) of this
section, the investment fund ceases to be an eligible investment on the
first day that the investment fund does not meet the requirements to be
an eligible investment;
(2) If the trustee is in compliance with the monitoring and
periodic determination requirements of paragraph (g)(6) of this
section, the investment fund is treated as ceasing to be an eligible
investment on the earlier of the date of the next periodic
determination conducted by the trustee or the date on which the trustee
acquires actual knowledge that the investment is no longer an eligible
investment.
(6) Trustee monitoring of investment funds. During the growth
period, the trustee must monitor each investment fund that the trustee
makes available to Trump account beneficiaries. After making an initial
determination that an investment fund is an eligible investment at the
time the trustee first offers the investment fund to any Trump account
for which it is the trustee, the trustee must then make subsequent
periodic determinations at least once every 12 months whether the
investment fund continues to be an eligible investment. These
determinations must include verifying that the annual fees and expenses
of the investment fund continue to meet the requirements of section
530A(b)(3)(A)(iii) and paragraph (f) of this section. The trustee may
rely on an investment fund's prospectus and other public documents
required by Federal securities laws in making determinations pursuant
to this paragraph (g)(6).
(7) Correction of administrative error. If a trustee has procedures
in place in accordance with this paragraph (g) but a portion of the
assets of a Trump account are not invested in an eligible investment
during the growth period due to an administrative error by the trustee
(for example, due to an oversight or mistake in applying the
procedures), the account will not cease to be a Trump account under
paragraph (g)(3) of this section if the trustee sells or disposes of
the assets that are not invested in an eligible investment and
reinvests the proceeds in an eligible investment consistent with
paragraph (g)(4)(ii) of this section within 30 calendar days from the
first day that the portion was not invested in an eligible investment.
Furthermore, the trustee must disclose to the account beneficiary the
duration of the error, the assets that were held during the error
period, and the amount reinvested in an eligible investment at the end
of the error period.
(h) Applicability dates. This section applies to taxable years
beginning on or after January 1, 2026, except for paragraph (g) of this
section, which applies for taxable years beginning on or after [DATE OF
PUBLICATION OF FINAL RULE].
Frank J. Bisignano,
Chief Executive Officer.
[FR Doc. 2026-17123 Filed 8-20-26 8:45 am]
BILLING CODE 4831-GV-P
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</html>Indexed from Federal Register on August 21, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.