Baby Steps: Treasury Issues First Set of Proposed Regulations for Trump Accounts

Section 70204 of the 2025 tax bill, commonly referred to as the One Big Beautiful Bill Act or OBBBA (Public Law 119-21, 139 Stat. 72 (July 4, 2025)), added new sections 530A, 6434 and 128 to the Internal Revenue Code of 1986, as amended (the “Code”).

• Section 530A of the Code establishes IRA-like accounts known as “Trump accounts” or “530A accounts” (“Accounts”) to provide tax-deferred investments for children under age 18 who have a Social Security Number (“SSN”). These Accounts have limited investment choice and distribution restrictions until the child is age 18. Contributions to these Accounts can be made by individuals, governments, charities and employers, with funding beginning on July 5, 2026.
• Section 6434 of the Code describes a pilot program through which the federal government will make a one-time $1,000 contribution to the Account of an eligible child born in 2025 through 2028 who is a U.S. citizen with an SSN and for whom an election has been made (referred to as the “$1,000 pilot program contribution”).
• Section 128 of the Code describes the deductible employer contributions that can be made in a nondiscriminatory manner to the Accounts of employees’ children.

On March 6, the U.S. Treasury Department released two proposed regulations related to: (i) the general requirements for opening these Accounts and (ii) the procedures for electing the federal government’s one-time $1,000 pilot program contribution to these Accounts for eligible children. Summarized below, these are the first regulations in what we expect will be a series of regulations issued with respect to the establishment and operation of these Accounts.

Comments. The proposed regulations are open for public comment and the Treasury Department has specified particular areas where public input is requested. Comments can be made via email or on paper by May 8, 2026. Please let us know if you have any comments that you would like us to share with the Treasury Department and the Internal Revenue Service (“IRS”).

General Requirements

The first proposed regulation (RIN 1545-BR91) sets out the general requirements for the Accounts and the election process to open these Accounts.[1]

What are Trump Accounts or 530A Accounts?

A Trump account (or 530A account) is a custodial-style traditional IRA for a child who is under age 18 in the calendar year the election to open the Account is made and who has an SSN that has been issued before the Account is opened (an “eligible individual”). The child is both the owner and beneficiary of the Account (sometimes referred to as the “account beneficiary”). The child cannot open an Account; rather, the Account must be opened by an “authorized individual” (described below) and must be administered by an “authorized individual” (described below).

An individual may only have one Account containing funds. It must be an initial Account or a rollover Account funded by a qualified rollover contribution from a prior Account. The Account cannot be a SIMPLE IRA under section 408(p) of the Code and cannot accept contributions from an employer’s SEP under section 408(k) of the Code.

Written Governing Instrument. There must be a written governing instrument, which among other provisions must include limitations on contributions and distributions, prohibitions on investments, requirements for Account trustees and coordination with IRA rules. Specifically, the written governing instrument must:

• designate the Account as a “Trump account” at the time of establishment (an existing IRA cannot be amended and restated to become an Account),
• require the trustee of the Account to be a bank except where nonbank trustees may be approved as provided in sections 530A(a) and 408(a)(2) of the Code,
• limit the investment of Account assets to “eligible investments” until the calendar year in which the Account beneficiary attains age 18,
• prohibit the commingling of the Account’s assets except in a common trust fund or common investment fund,
• prohibit investment in life insurance contracts,
• provide that the Account balance is nonforfeitable,
• limit contributions to cash,
• allow contributions to be made only during the growth period,
• limit distributions until the Account beneficiary attains age 18, and
• subject the Account to required minimum distribution rules.

For purposes of these Accounts, the proposed rule provides that an individual will attain the requisite age on the individual’s birthday. As a result, an individual born on July 4, 2012, will attain age 18 on July 4, 2030.

Who Can Make the Election to Open an Account?

Only an “authorized individual” or the secretary of the U.S. Department of Treasury may open an Account for an eligible individual:

• The authorized individual is the person who is authorized to make the $1,000 pilot program contribution election for an eligible child (see below).
• If no pilot program contribution election is being made, the authorized individual would be, in the following priority order: a legal guardian, parent, adult sibling or grandparent of the eligible individual. Brownstein Comment: The Treasury Department is seeking comments as to (1) whether definitions are needed for the terms “legal guardian,” “parent,” “sibling” and “grandparent,” (2) whether any other individual who bears a relationship to the eligible individual under section 152(c)(2) of the Code should also be an authorized individual, and (3) who may be the authorized individual in situations involving foster children, orphans, emancipated minors, wards of the state and other situations involving minors.

If an individual who was not an authorized individual made the election to open a child’s Account, the proposed regulations deem that the election was made by the secretary of the U.S. Treasury Department. This is to ensure that the Account maintains its eligible status. The Treasury Department and the IRS declined to establish an opt-out design for establishing Accounts for eligible individuals as such design is administratively unfeasible given privacy restrictions on accessing taxpayer information, among other reasons. The Treasury Department has asked for comments on ways the election to open an Account may be simplified while complying with tax, privacy, banking, securities and anti-laundering law.

Authorized Individual Is Also the Responsible Party.  The proposed regulation states that, unless state law or the Account agreement otherwise provides, the authorized individual who has opened the Account for an eligible individual is also the responsible party regarding the Account. This means that not only does this person open the Account, he or she also has legal capacity to make decisions and take actions with respect to the Account on behalf of the eligible individual (e.g., decide investments, direct transfers to another trustee, select a successor responsible party). If it becomes necessary or desirable to replace the responsible party, the rules regarding such replacement could be governed by applicable law (federal or state), the underlying Account agreement or court order.

How to Make the Election to Open an Account?

An election to open an Account for an eligible individual must be made before Dec. 31 of the calendar year in which the eligible individual attains age 17. The Account is established by the authorized individual filing IRS Form 4547 or by using the online portal at https://form.trumpaccounts.gov/. See also the Instructions to Form 4547.

If more than one individual makes an election to open an Account on behalf of an eligible individual, only the first received election will be processed.

Brownstein comment: We expect that many grandparents may be eager to make contributions to their grandchildren’s Accounts. Given the rules for setting up an Account and the annual contribution limitations, a child’s family members and relatives should carefully coordinate their efforts to open Accounts, make contributions and elect the $1,000 pilot program contribution for the family’s various eligible children. It may be helpful to submit comments on the need for guidance to mitigate excess contributions due to miscommunication among family members.

$1,000 Pilot Program Contribution – Election Process

To encourage taxpayers to set up Accounts for “eligible individuals who are “eligible children,” the federal government will make a one-time $1,000 contribution to the Account of a “qualifying child” born between Jan. 1, 2025, and Dec. 31, 2028, who is a U.S. citizen and who has a valid SSN issued before the Account is opened and for whom an election under section 6434 of the Code has been made. Brownstein comment: The criteria for determining whether a child is eligible to receive the $1,000 pilot program contribution and who can make the election for the contribution are more restrictive than the criteria for determining who is generally eligible for an Account.

The second proposed regulation (RIN 1545-BS00) sets out the procedural rules regarding the election for the $1,000 pilot program contribution and the timing as to when it will be made to an Account. Note: many of the basic administrative rule provisions in the first proposed regulation are repeated in this second regulation. For brevity we do not repeat them.

What Children Are Eligible for the $1,000 Pilot Program Contribution?

A child is eligible for the $1,000 pilot program contribution if all of the following criteria are met:

• The child is anticipated to be a “qualifying child” (within the meaning of section 152(c) of the Code) of the individual taxpayer making the election on IRS Form 4547 for the $1,000 pilot program contribution.

Who is a Qualifying Child[2]

The child must be the taxpayer’s son or daughter, stepchild, foster child, brother or sister, half-brother or half-sister, stepbrother or stepsister, or a descendant of any of them (e.g., grandchild, niece or nephew).The child must be (a) under age 19 at the end of the year and younger than the taxpayer (or taxpayer’s spouse if filing jointly); (b) under age 24 at the end of the year, if a student, and younger than the taxpayer (or taxpayer’s spouse if filing jointly); or (c) any age if permanently and totally disabled at any time during the year.The child must have lived with the taxpayer for more than half of the year, subject to several exceptions such as for the child’s temporary absence (e.g., illness, school, vacation, military service, in juvenile detention), mid-year birth or death, adoption, foster, kidnap, or is the child of divorced or separated parents or parents who live apart.The child must not have provided more than half of the child’s own support for the year.The child must not be filing a joint return for the year (unless that joint return is filed only to claim a refund of withheld income tax or estimated tax paid).

• The child is a United States citizen. Brownstein comment: This requirement does not appear to be one that applies to opening an Account, only for electing the $1,000 pilot program contribution. This requirement will delay pilot program elections for adopted children who were born outside the U.S.
• The child has an SSN that has been issued prior to the date of the election for the $1,000 pilot program contribution. Brownstein comment: This requirement may delay both Account establishment and elections for pilot program contributions for adopted children as SSN applications are best filed after adoption is finalized. Application processing can take up to 12 weeks. Adopting parents will need to determine whether anyone else previously applied for an SSN for the child and/or made the pilot program contribution election on behalf of the child. Fortunately, an election for the pilot program contribution can be made any time up to the calendar year in which the child attains age 17. It may be helpful to submit comments on a process for authorized individuals to determine whether an Account already has been opened and/or the election for the pilot program contribution was made, as well as rules addressing how multiple Accounts and excess contributions should be handled.
• No other election for the $1,000 pilot program contribution has been made and processed for the child.

Who Can Make the Election for the Child to Receive the $1,000 Pilot Program Contribution?

Under the proposed regulations, the $1,000 pilot program contribution election can only be made by an individual taxpayer who anticipates that the child will be the taxpayer’s “qualifying child” for the year in which the election is made (a “pilot program-electing individual”). Generally, this means a parent, stepparent, foster parent, sibling, half-sibling or step-sibling, grandparent, aunt or uncle. The IRS Form 4547 includes guardians and other “authorized individuals.”

Brownstein comment: The definitions of the individual who generally can open an Account and the individual who can elect the pilot program contributions are not identical and could result in two different people acting with respect to a child’s Account. This disparity may lead to confusion. It may be helpful to submit comments about this disparity.

Timing and Form of Election. The earliest a pilot program election can be made is the child’s date of eligibility (that is, the child is born, is a U.S. citizen and has an SSN). The last day on which a pilot program election can be made is Dec. 31 of the calendar year in which the eligible child attains age 17 (that is, the last day of the “growth period”). The election for the $1,000 pilot program contribution is made on IRS Form 4547, which can be filed electronically or in a paper form. 

Timing of Contribution Deposit. The Treasury Department will make its $1,000 contribution as soon as practicable after the election is made and has confirmed with the initial Account trustee that the child’s Account has been opened, but not earlier than July 4, 2026.

Tax Consequences. The proposed regulations apply a fairly complicated application of federal tax law, including the creation of a “special taxable year,” to get the $1,000 contribution into an eligible child’s Account in a tax-free manner, without requiring the child to have includible income, and without requiring a tax return to be filed by or on behalf of the child. The details of this analysis are laid out in the preamble to the proposed regulations. As part of applying this analytical framework, section 6434(f) of the Code and the proposed regulations include provisions to safeguard the $1,000 contribution from being subject to levy, reduction or mandatory offsets, such as those related to past-due support, debts owed to federal agencies, past-due enforceable state income tax obligations, and unemployment debts; or accruing overpayment interest charges before Jan. 1, 2028.

Additional Guidance Needed

These two proposed regulations are the first installment of guidance under section 530A of the Code. Much more guidance is needed, including for the following:

Rules Applicable During the Growth Period

A special set of rules governing contributions, investments, distributions and reporting applies to the Account during the “growth period,” which begins on the date the Account is established and ends on Dec. 31 of the calendar year in which the child attains age 17. After the growth period, traditional IRA rules generally apply.

The proposed regulations do not address the growth period special rules, but the preamble indicates that sections of the regulations are reserved for rules to address these issues, which will be proposed at a later date.

Employer Contributions to the Accounts of Employees’ Children

Under section 128 of the Code, an employer can annually contribute up to $2,500 per employee (indexed for inflation after 2027) to Accounts established for an employee and/or an employee’s eligible children. If an employee has multiple children, the employer may split its contribution among the children’s Accounts in any ratio. Employer contributions are excluded from the employee’s income, are tax deductible by the employer, and count toward the child’s $5,000 annual contribution limit in the year in which the employer contribution is made. In addition, an employer also may choose to offer employees a salary reduction program under a cafeteria plan so that employees can make pre-tax contributions to their children’s Accounts (similar to how health savings accounts (HSA) contributions are made). To make employer contributions, an employer must establish a “separate written plan” that meets requirements similar to the requirements of Code section 129(d)(2) [must be nondiscriminatory in favor of highly compensated employees], section 129(d)(3) [must benefit a nondiscriminatory classification of employees], section 129(d)(6) [must provide required notice to employees of the benefit (and must also inform the trustee of the amount of the contribution)], section 129(d)(7) [must provide statements of account], and section 129(d)(8) [average benefits to nonhighly compensated employees must be at least 55% of average benefits to highly compensated employees].

Brownstein comment: We expect that employers will consider whether to add aspects of these Accounts to the employer’s financial wellness benefits platform for employees. However, there are many open questions regarding how employers may make contributions to the Accounts and/or allow for employee contribution deductions through a cafeteria plan. It is expected that the IRS will issue regulations in the near future regarding employer contributions and employee pre-tax salary deferrals under cafeteria plans. This additional guidance should help employers make informed decisions about whether and how these Accounts may be added as an employee benefit.

Brownstein comment: There are still a few months before these Accounts are up and running. During this period, we recommend that anyone who is considering establishing an Account for an eligible individual consult their financial advisor as it is important to understand the role these Accounts may play in the family’s financial planning priorities and estate planning strategies. Many financial experts are recommending that these Accounts be layered with other child savings vehicles that offer alternative tax advantages, such as 529 plans (state-sponsored education savings programs that grow tax‑free and allow tax‑free withdrawals for qualified education expenses, often with state tax incentives, a portion of which can be rolled into a Roth IRA), Coverdell Education Savings Accounts (section 530 of the Code), Uniform Transfers to Minors Act (UTMA) or Uniform Gifts to Minors Act (UGMA) custodial accounts, and trusts. A financial advisor can help compare and contrast these child savings vehicles and analyze which ones may work best for the family’s particular circumstances.

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[1] Proposed Treasury Regulation section 1.530A-1.

[2] For a detailed summary, see, IRS Publication 501, Dependents, Standard Deduction, and Filing Information.

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THIS DOCUMENT IS INTENDED TO PROVIDE YOU WITH GENERAL INFORMATION REGARDING GUIDANCE ON 530A accounts. THE CONTENTS OF THIS DOCUMENT ARE NOT INTENDED TO PROVIDE SPECIFIC LEGAL ADVICE. IF YOU HAVE ANY QUESTIONS ABOUT THE CONTENTS OF THIS DOCUMENT OR IF YOU NEED LEGAL ADVICE AS TO AN ISSUE, PLEASE CONTACT THE ATTORNEYS LISTED OR YOUR REGULAR BROWNSTEIN HYATT FARBER SCHRECK, LLP ATTORNEY. THIS COMMUNICATION MAY BE CONSIDERED ADVERTISING IN SOME JURISDICTIONS.