JCT Explains Trump Account Contributions

Published 2026-05-29

GiftLaw Note:

4. Trump Accounts and Contribution Pilot Program (sec. 70204 of the Act and secs. 408 and new sec. 530A of the Code)

Explanation of Provision

In general

The provision establishes a new type of tax-preferred account, a ‘‘Trump account,’’ which may be opened for the benefit of a child. To be eligible for a Trump account, the account beneficiary must have a social security number and must not have attained age 18 before the close of the calendar year in which an election is made to open the account. The initial account must be created by the Secretary. The Secretary may elect to establish the account on behalf of an individual if the Secretary determines (based on information available to the Secretary from tax returns or otherwise) that the individual is eligible. However, if no such election has been made, another individual may elect to have the Secretary establish a Trump account on behalf of an eligible individual at such time and in such manner as the Secretary may prescribe. After the creation of the initial Trump account, a rollover Trump account may be created if the individual has not attained age 18 before the close of the calendar year and if the account is funded by a qualified rollover contribution (described below). A Trump account is generally treated as a traditional IRA except that special rules apply, many of which apply to the account during the period before the calendar year that the account beneficiary turns 18, as described below. In addition, to qualify as a Trump account, the account must be designated as such at the time of establishment. It must not accept any contributions earlier than the date that is 12 months after the date of the provision’s enactment.

Contributions

Aggregate annual contributions made in any calendar year before the year in which the account beneficiary turns 18 (other than exempt contributions, described below) are limited to $5,000, adjusted for inflation. During this period, contributions to a Trump account are not eligible for the deduction for IRA contributions,283 and are not taken into account for purposes of the contribution limits that apply to any other IRA owned by the account beneficiary. The special timing rule that deems contributions made to an IRA by the tax filing deadline to be made for the preceding taxable year also does not apply during this time period.284

Contributions that are exempt from the annual contribution limit include (1) qualified rollover contributions, (2) qualified general contributions, and (3) contributions provided under the Trump Accounts Contribution Pilot Program described below. A qualified rollover contribution is an amount paid in a direct trustee-to-trust-ee transfer from a Trump account maintained for the benefit of an account beneficiary to another Trump account maintained for the benefit of the same account beneficiary. In order to qualify, the entire balance must be rolled over. A qualified general contribution is a contribution made by the Secretary pursuant to a general funding contribution. A general funding contribution is a contribution made by a State or a political subdivision of a State, the United States, the District of Columbia,285 an Indian tribal government, or a tax-exempt organization described in section 501(c)(3). The contribution must specify a qualified class of account beneficiaries to whose Trump accounts the contribution is to be made. For this purpose, a qualified class means any of the following: (1) all account beneficiaries who have not attained the age of 18 before the close of the calendar year in which the contribution is made; (2) all account beneficiaries described in (1) who reside in one or more States or other qualified geographic areas specified by the terms of the general funding contribution; and (3) all account beneficiaries described in (1) who were born in one or more specified calendar years. A ‘‘qualified geographic area’’ means any geographic area in which not less than 5,000 account beneficiaries reside and that is designated as such by the Secretary. A qualified general contribution is not included in the account beneficiary’s gross income.286 Under the provision, employers may contribute to the Trump account of an employee or a dependent of an employee through the establishment of a Trump account contribution program. Contributions under the program are not includible in the employee’s gross income. In order to qualify, the program must be a separate written plan of the employer for the exclusive benefit of the employer’s employees to provide contributions to the Trump accounts of such employees or their dependents. The amount that may be excluded from an employee’s income is limited to $2,500 annually, adjusted for inflation, and such exclusion applies only to taxable years ending before the calendar year in which the account beneficiary turns 18. 287 The Trump account contribution program must meet requirements similar to those applicable to a dependent care assistance program under section 129, such as those relating to nondiscrimination, eligibility, and employee notices. 288

Eligible investments

For any period before the first day of the calendar year in which the account beneficiary turns 18, account funds must be invested in one or more eligible investments. An eligible investment is any mutual fund or exchange traded fund that (1) tracks the returns of a qualified index, (2) does not use leverage, (3) does not have annual fees and expenses of more than 0.1 percent of the balance of the investment in the fund, and (4) meets such other criteria as the Secretary determines appropriate. ‘‘Qualified index’’ means either 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 289 are traded on a qualified board or exchange.290 This term does not include any industry or sector-specific index based on market capitalization.

Distributions

Distributions from a Trump account are generally not permitted before the first day of the calendar year in which the account beneficiary attains age 18.291 Exceptions apply for (1) qualified rollover contributions, (2) qualified ABLE rollover contributions, (3) excess contributions, described below, and (4) distributions after the death of the account beneficiary. Qualified rollover contributions and qualified ABLE rollover contributions are not included in the account beneficiary’s gross income. A qualified ABLE rollover contribution is an amount that is paid during the calendar year in which the account beneficiary turns 17 in a direct trustee-to-trustee transfer from the account beneficiary’s Trump account to such beneficiary’s ABLE account, 292  but only if the transfer equals the account beneficiary’s entire balance in the Trump account. If a contribution is made to a Trump account before the calendar year in which the account beneficiary turns 18 that exceeds the annual contribution limit, such excess contribution may be distributed from the account. The amount of such distribution is not included in the account beneficiary’s gross income. However, a tax is imposed on the distributee, for the taxable year of the distribution, of 100 percent of the amount of net income attributable to such excess. In the case of the death of the account beneficiary before the first day of the calendar year in which the beneficiary turns 18, the prohibition on distributions does not apply to any person who acquires such beneficiary’s interest in the Trump account. Such account ceases to be a Trump account as of the date of death. Unless the person acquiring the beneficiary’s interest is the beneficiary’s estate, the fair market value of the assets in the account (reduced by basis, if any) as of such date are includible in the person’s gross income for the taxable year including such date. In the case of the estate acquiring the beneficiary’s interest, such amount is includible in the beneficiary’s gross income for the beneficiary’s last taxable year. Upon distribution, the following contributions are not included in the participant’s basis: (1) any qualified general contributions, (2) any contribution provided under the Trump Accounts Contribution Pilot Program, and (3) any employer contribution made under a Trump account contribution program.293

Trump account trustees

In the case of any Trump account created by the Secretary, the Secretary must take into account the following criteria in selecting the trustee: (1) the history of reliability and regulatory compliance of the trustee; (2) the customer service experience of the trustee; and (3) the costs imposed by the trustee on the account or the account beneficiary. The trustee of a Trump account must make reports regarding the account to the Secretary and the account beneficiary at such time and in such manner as the Secretary may require. The reports must include information with respect to (1) contributions (including the amount and source of any contribution in excess of $25 made from a person other than the Secretary, the account beneficiary, or the parent or legal guardian of the account beneficiary); (2) distributions (including distributions which are qualified rollover contributions); (3) the fair market value of the account; (4) the basis with respect to such account, and (5) such other matters as the Secretary may require. Not later than 30 days after a qualified rollover contribution, the trustee of the Trump account to which the contribution was made must make a report to the Secretary that includes: (1) the name, address, and social security number of the account beneficiary; (2) the name and address of the trustee, (3) the account number, (4) the routing number of the trustee, and (5) such other information as the Secretary may require. The provision imposes a penalty of $50 for each failure to file a required report unless such failure is due to reasonable cause.294 Both the reports relating to the account and those relating to rollovers are required only during periods before the calendar year in which the account beneficiary turns 18.

Trump Accounts Contribution Pilot Program

Under a pilot program, the Secretary must make a payment of $1,000 to the Trump account of each eligible child, provided certain requirements are met. In order to be eligible, a child must be a United States citizen who is born after December 31, 2024, and before January 1, 2029. In addition, an individual with respect to whom the child is a dependent 295 must make an election under the Trump Accounts Contribution Pilot Program, in such time and manner as the Secretary provides. No prior election may have been made for the child under the program, and the individual making the election must include the child’s social security number.296 If an individual makes an election with respect to an eligible child, the eligible child is treated as making an overpayment of tax for the taxable year in which the election was made in the amount of $1,000. The Secretary then pays that amount to the eligible child’s Trump account. Such payment is not subject to reduction or offset under section 6402(c), (d), (e), or (f), or reduced or offset by other assessed Federal taxes that would otherwise be subject to levy or collection. The amount in the Trump account is treated as an overpayment for purposes of interest; 297 such interest will not begin to accrue before January 1, 2028. The Trump Accounts Contribution Pilot Program does not apply to possessions of the United States with a mirror code tax system 298 unless the possession so elects. If an individual makes an election under the Trump Accounts Contribution Pilot Program with respect to someone who is not the individual’s eligible child, a penalty of $500 is imposed in the case of negligence or disregard of rules or regulations,299 and a penalty of $1,000 is imposed in the case of fraud.

Funding

The provision appropriates $410,000,000 to Treasury, out of any money in the Treasury not otherwise appropriated, in addition to amounts otherwise available, to remain available until September 30, 2034 to carry out the purposes of this provision.