As described in earlier Thompson Hine blog posts (here and here), Trump accounts provide a new private savings vehicle for eligible minor children. The Treasury Department and IRS recently released additional guidance related to these accounts within two coordinated notices of proposed rulemaking that address the critical threshold questions of (1) how Trump accounts are opened generally, and (2) how the one-time $1,000 government “pilot program” contribution is deposited into the accounts of eligible children born from 2025 through 2028. As expected, additional guidance regarding employer plan and other aspects of these accounts, such as special rules governing Trump accounts compared to traditional IRAs, was not included.

Opening a Trump Account

The proposal sets out the rules for making an election to open an initial Trump account for the benefit of an “eligible individual” – generally, a child to whom a Social Security number has been issued and who has not attained age 17 by December 31st of the year in which an election is made – and provides foundational definitions.

An election to open an initial account may be made by an “authorized individual” in a defined priority order that tracks the Section 529A (ABLE account) hierarchy: the person making a pilot program election (discussed below) takes priority; otherwise, the order is legal guardian, parent, adult sibling, then grandparent.

The election must be submitted on IRS Form 4547 or via an IRS electronic application before year the child turns 18 and can be independent of any tax return. Only the first processed election for an eligible individual will result in an account being opened.  The individual who makes the election is the default person responsible (called the “responsible party”) for making decisions with respect to the Trump account, including selection of eligible investments, transfer to a qualified rollover account, or selection of a successor responsible party.

The preamble to the proposal explains that Internal Revenue Code confidentiality constraints prevent an account from being opened or responsible parties assigned without an authorized individual’s election. The only exception is when someone who was not an authorized individual made the initial election to establish the Trump Account for the benefit of an eligible individual, in which case the Secretary of the Treasury will use the information provided to open the account for the eligible individual. The proposal requests comments on whether states or other government entities should be authorized to elect on behalf of eligible individuals after a period of family inaction, and on modernizing nonbank trustee standards.

Under the proposal, Nonbank IRA trustees already approved by the IRS as of December 31, 2025, would automatically qualify to serve as Trump account trustees; however, a nonbank trustee must notify the IRS in writing if it actually becomes a Trump account trustee.

The $1,000 Pilot Program Contribution

The second proposal provides guidance on the one-time $1,000 Treasury contribution for each “eligible child”, meaning a child (1) who was born from 2025 through 2028, (2) who is a U.S. citizen, (3) to whom a Social Security number has been issued, and (4) with respect to whom no prior processed pilot contribution election has been made.

The regulations create a novel “special taxable year” for the eligible child that begins the moment an election is processed and ends immediately thereafter with zero federal income tax liability. During this special taxable year, the Secretary treats the child as having made a $1,000 tax payment, generating an overpayment that is deposited into the child’s Trump account. The $1,000 is protected from Treasury Offset Program offsets and federal tax levies. Critically, no payment can be made unless the child already has an established Trump account – there is no alternative remittance if the account does not exist.

Elections can be made as early as the day the child becomes eligible (in practice, once a valid SSN is issued) and as late as December 31 of the year the child attains age 17. Late-election relief is not available.

We expect further guidance on these topics in the coming months and will continue to monitor developments. Employers interested in offering Trump account contributions may wish to start planning now to be in the best position when further guidance on the employer plans aspects of these accounts is published. Trustees interested in serving as rollover Trump account trustees may wish to submit comments to Treasury and IRS about the applicable rules and be on the lookout for future guidance. Please contact the authors or your Thompson Hine attorney with any questions.