Nearly all of the weight in the proposed regulations Treasury and the Internal Revenue Service released on August 20 rests on a single decimal place. A fund held inside a Trump Account would have to charge annual fees and expenses of no more than 0.1 percent of the balance invested in it. Three other conditions sit alongside that one, and the restriction stops entirely the year the child turns 17. Nothing here is final; these are proposed rules open for comment.
The four tests a fund would have to pass at once
The proposal defines what counts as an eligible investment for a Trump Account, described in the announcement as a new type of traditional individual retirement arrangement created under the Working Families Tax Cuts. The definition is written as a single sentence with several conditions stacked inside it, and a fund would need to satisfy all of them, not most of them.
Under the proposed regulations, an eligible investment generally is a mutual fund or exchange traded fund that tracks an equity index of primarily U.S. companies, such as the S&P 500 index, does not use leverage, and has annual fees and expenses of no more than 0.1 percent of the balance of the investment in the fund. Each clause cuts something out. The index requirement excludes actively managed funds. The reference to primarily U.S. companies excludes international and global funds. The leverage clause excludes geared products. The 0.1 percent ceiling then excludes anything left that costs more than a tenth of a percent a year.
It is worth being precise about what that ceiling covers. It is a limit on the fund’s own annual costs, expressed as a share of the balance invested in the fund. It is not a limit on what a trustee might charge to administer the account itself, a subject the announcement does not address at all. A household comparing providers if these rules are finalized would be looking at two different fee questions, and the proposal answers only one of them.
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The restrictions would lapse the year the beneficiary turns 17
The investment rules would not run for the life of the account. They would apply only during what the proposal calls the growth period, which begins when the account beneficiary’s initial Trump Account is established and ends on December 31 of the calendar year in which the beneficiary turns age 17. After the growth period, the eligible investment restrictions would no longer apply.
That is an unusual design. The narrow menu governs the years when the money is expected to sit and compound, and it releases at the point the beneficiary is approaching adulthood. For a family, the practical reading is that the low-cost index requirement is a floor for childhood, not a permanent feature of the account, and that whatever rules govern a traditional IRA more generally would take over once the growth period closes.
If no one picks a fund, the trustee picks one
The proposal also addresses inaction, which is how most default rules earn their importance. If an account beneficiary does not select an eligible investment offered by the trustee, funds in a Trump Account automatically would be invested during the growth period in an eligible investment selected by the trustee.
The wording matters. The default is chosen by the financial institution holding the account, not by the government, and not from a government-designated list. The rules would set the boundaries of what the trustee may choose, and the trustee would choose inside them. The announcement names no specific fund or fund family anywhere, and any list of particular tickers circulating alongside coverage of this proposal comes from somewhere other than the IRS.
Comments close October 20, and this is the second round
These are proposed regulations, and Treasury and the IRS request additional comments from interested parties by October 20, 2026. The announcement does not print submission instructions; it says the complete instructions appear in the proposed regulations themselves, which were released as a Federal Register public-inspection document numbered 2026-17123. Anyone intending to file a comment needs that document rather than the press release.
The word additional is doing real work in that sentence. The proposal takes into account stakeholder comments already submitted in response to Notice 2025-68, issued in December 2025, so this is a second pass at the question rather than a first draft. The regulations generally would apply to tax years beginning on or after January 1, 2026.
The same IRS announcement restates the basics of the account, which are separate from the investment question. A parent, guardian or other authorized individual can open a Trump Account for a child with a Social Security number if the election is made before the calendar year in which the child turns age 18, using Form 4547, Trump Account Election(s), submitted through an IRS Individual Online Account. If the child is a U.S. citizen born in 2025 through 2028, the person making the election can check a box on Form 4547 to elect a $1,000 pilot program contribution. General program information is posted at trumpaccounts.gov.
The quotation in the announcement is attributed to IRS Chief Executive Officer Frank J. Bisignano, a title that is itself new to the agency’s public materials. What the release does not contain is equally instructive: no contribution limit, no description of how withdrawals are taxed, and no projected balances. Those questions live in the statute and in other guidance, not in the proposal published on August 20, whose subject is the eligible investment definition and the 0.1 percent ceiling inside it.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
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