July 2025
On July 4, 2025 President Trump signed into law the “One Big Beautiful Bill Act.” It creates a new type of IRA called a Trump Account. (TA). These accounts will apply for tax year 2026 and subsequent years. However, contributions cannot be made until July 5, 2026.
A TA may be established by the U.S. Secretary of the Treasury on behalf of a child or it may be established by a parent or guardian or a third party on behalf of the account beneficiary. The account must be designated a TA under rules to be established by the Secretary. A TA must be invested into an indexed fund.
There are two types of Trump Accounts - those for newborns (2025-2028) and those children who are age 17 or younger as of December 31 of the year in which the TA is established. The U.S. will contribute $1,000 into a TA of a child born in 2025-2028.
In order to establish a TA there must be an election and the account beneficiary must be age 17 or younger as of December 31 of the year in which the TA is established.
The account beneficiary must have been issued a social security number before the election is made. Unless an exception applies, a withdrawal must not occur before the year the account beneficiary attains the age of 18.
The IRS will need to issue substantial guidance as the statutory law is silent on many important subjects. The IRS will need to issue model TA forms, issue instructions relating to contributions, distributions, rollovers, investments and IRS reporting. The TA custodian/trustee will need to have new computer capabilities as the IRS will have some special reporting requirements.
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