In Notice 2025-68 (Notice), the IRS announced initial guidance and its intent to issue regulations on "Trump accounts," which are individual retirement accounts (IRAs) for children under 18 years old (account beneficiaries).

The Notice informs individuals, employers and trustees on the general requirements for creating initial and rollover Trump accounts, contributions (including qualified general contributions and IRC Section 128 employer contributions), eligible investments, distributions, reporting and coordination with the rules applicable to other types of IRAs.

Comments should be submitted to the IRS in writing on or before February 20, 2026.

General requirements

Trump accounts were created through IRC Section 530A of the "One Big Beautiful Bill Act" (P.L. 119-21, OBBBA).

Trump accounts are IRAs that must comply with the following requirements:

• Funds can only be invested in eligible investments, which are primarily low-cost index funds
• Distributions are generally prohibited until the beneficiary turns 18
• Deductions for account contributions cannot be made by individuals under IRC Section 219

Trump accounts have separate contribution limits from other IRAs. In addition, trustee reporting requirements differ from those of other IRAs.

Contributions

The following types of contributions may be made to a Trump account during the "growth period" (the period that ends before January 1 of the calendar year in which the account beneficiary attains age 18):

• A $1,000 pilot program contribution from the US Treasury under IRC Section 6434 for eligible children, meaning those born in 2025 through 2028, who are US citizens with a social security number
• Qualified general contributions (funded by states (or their political subdivisions), the United States, the District of Columbia, Indian tribal governments or IRC Section 501(c)(3) tax-exempt organizations) for members of a qualified class of account beneficiaries
• Employer contributions under IRC Section 128 that are not includible in the gross income of the employee
• Qualified rollover contributions (from a prior Trump account)
• Contributions from other sources (such as the account beneficiary, parents or others)

Pilot program contributions, qualified general contributions and qualified rollover contributions are not subject to an annual contribution limit.

Individuals

An individual may establish a Trump account by making the election on IRS Form 4547, Trump Account Election(s), when filing a tax return or through an online tool or application on trumpaccounts.gov (which is expected to be available in the middle of 2026). The IRS released a draft Form 4547 with instructions on December 3, 2025. The account may be created by a legal guardian, parent, adult sibling or grandparent, but each account beneficiary may only have one Trump account.

The limit for aggregate contributions (other than exempt contributions) is $5,000 per year for 2026 and 2027, and thereafter subject to cost-of-living adjustments.

Once the account is established, Treasury will send the individual information about how to activate the account beginning in May 2026. Contributions to Trump accounts cannot be made before July 4, 2026. The individual will be able to select eligible investments and request distributions.

A rollover account may be established for the account beneficiary after the initial account is established. Once the account beneficiary has turned 18, the Trump account may be rolled over to an individual retirement arrangement or other eligible retirement plan. Trustees may set up Trump accounts to automatically convert into a traditional IRA upon the end of the growth period. The Trump account will then generally be subject to the IRC Section 408 rules that apply to other traditional IRAs. However, a Trump account can never receive contributions under an IRC Section 408(k) SEP arrangement or IRC Section 408(p) SIMPLE IRA plan.

Distributions

No distributions may be made from a Trump account during the growth period, except for qualified rollover contributions, qualified ABLE rollover contributions, distributions of excess contributions and distributions upon death of the account beneficiary.

Contributions from parents/guardians or other individuals create the basis for the account. These amounts are not taxable when withdrawn by the account beneficiary after the end of the growth period. However, employer contributions, the $1,000 federal contribution and any charitable gifts into the account do not create basis within the account and are taxable when withdrawn. Lastly, any earnings within the account are taxable to the account beneficiary when withdrawn.

After the growth period, the distribution from a Trump account is proportionally allocated based on the account's basis versus its total value. Trump accounts are excluded when determining the basis allocation for distributions from traditional IRAs.

Employers

IRC Section 128 employer contributions (which are pre-tax) and contributions from other sources (which could be pre-tax or post-tax depending on the source) during the growth period are subject to an aggregate annual limit of $5,000 (subject to cost-of-living adjustments after 2027). Employer contributions may make up $2,500 of the $5,000 limit. The $2,500 annual limit is per employee and not per dependent of the employee. For example, if an employee has two or more children who each have Trump accounts, the Notice says an employer with a Trump account contribution program may only contribute up to $2,500 in the aggregate for 2026 to those Trump accounts.

A Trump account contribution program can be offered through an IRC Section 125 cafeteria plan that makes post-tax contributions from the employee's salary. Contributions made by salary reduction must go to the Trump account of the employee's dependent, not to the employee's own Trump account (i.e., employees who are minors may not make contributions to their Trump account through salary reductions). According to the Notice, contributing to the minor employee's own Trump account would be considered deferred compensation under IRC Section 125(d)(2)(A), because the minor employee would have a vested right to receive payment in a future year.

If employers choose to include Trump Account contributions in their IRC Section 125 cafeteria plans, they must establish a formal program with a written plan document and comply with the applicable nondiscrimination rules. The Notice said proposed regulations will address how Trump account contribution programs coordinate with IRC Section 125 cafeteria plans.

According to the draft 2026 Form W-2, IRC Section 128 employer contributions to a Trump account of a minor employee or dependent of an employee are reported in box 12, Code TA.

Trustees

The trustee of a Trump account must be a bank (as defined in IRC Section 408(n)) or other person who is approved by the IRS to be a nonbank trustee of a Trump account (any person approved by the IRS as of December 31, 2025, to be a nonbank trustee of an IRA under IRC Section 408(a) is automatically approved to be a nonbank trustee of a Trump account). Nonbank trustees must notify the IRS when they become a Trump account trustee.

Trump accounts must be invested in eligible investments, which are typically mutual funds or exchange-traded funds (ETF) that (1) follow an index of mostly US companies, like the Standard and Poor's 500, (2) do not use leverage, and (3) have annual fees and expenses no greater than 0.1% of the invested balance.

Trump accounts are subject to the reporting requirements under IRC Section 510A(i) during the growth period, which are similar to the IRC Section 408(i) reporting requirements with some additional required information, including the amount and source of contributions. In addition, trustees must provide certain annual reporting. According to the Notice, forms and instructions regarding such annual reporting will be issued in the future. After the growth period, the reporting requirements of IRC Section 408(i) apply.

Trustees must have procedures in place to confirm that rollovers, contributions and distributions comply with the requirements.

Implications

The Notice is helpful because it gives information on how the Trump accounts will be structured, their requirements and how they coordinate with existing law. Compliance, however, may be challenging, especially for employers that choose to include Trump account elections.

Employers that choose to include Trump account contributions in their IRC Section 125 cafeteria plans must comply with the applicable nondiscrimination rules and establish a formal program with a written plan document. Employers considering a Trump account election should consult with their benefits advisor.

Payroll departments will need to coordinate with plan administrators when implementing system configurations for the accurate taxation and reporting of employer/employee Trump account contributions.

While taxation on any growth within the Trump accounts is deferred until distribution, individuals that establish the accounts should consider the tax impact that will arise once the child reaches 18 and is eligible for distributions. In addition, individuals should consider how Trump accounts may affect other options for children, such as tax-deferred college savings plans (so-called 529 plans), whose rules on eligible investments, transferability and timing of distributions may differ.