The Treasury Department and the IRS released proposed regulations on August 20, 2026 (IR-2026-96) that define exactly what children’s Trump Accounts can invest in — and the rules are strict: low-cost U.S. equity index mutual funds or ETFs only, with annual fees capped at 0.1% and no leverage allowed. If you’re opening one for your child, this is precisely the kind of complexity that makes it worth understanding when to hire a financial advisor rather than going it alone.
What the IRS Proposed
Trump Accounts are a new type of traditional IRA created under the Working Families Tax Cuts Act, open to any child under 18 with a Social Security number. Under the proposed rules, according to the IRS, all contributions during the “growth period” — from account opening through December 31 of the year the child turns 17 — must be invested exclusively in eligible index funds tracking U.S. equity benchmarks (such as the S&P 500), with an expense ratio no higher than 0.10% and no leverage. If a parent doesn’t choose a fund, the trustee automatically selects a compliant default. The annual contribution limit is $5,000 in 2026 (adjusted for inflation after 2027), and children born between 2025 and 2028 who are U.S. citizens may receive a $1,000 government seed deposit when parents file Form 4547. Comments on the proposed rules are due by October 20, 2026.
What This Means for Families
The guardrails are deliberately simple — index funds only, low fees, no complex instruments — but the surrounding decisions are not. Families still need to choose a trustee, decide whether to max the $5,000 annual contribution, coordinate the account with existing 529 plans or custodial accounts, and understand the tax treatment once the child turns 17 and restrictions lift. For most parents, a Trump Account will be one piece of a broader financial picture, and navigating how it fits alongside retirement savings and estate planning is exactly the kind of holistic question a qualified financial advisor helps answer.