On the same day proposed regulations were released by the Treasury Department and the IRS on the contribution pilot program for Trump Accounts, the two agencies also issued proposed rules on how parents or guardians of an eligible child can open a Trump Account.
Specifically, the proposed regulations on March 6 provide general requirements for Trump Accounts, certain definitions relating to Trump Accounts, election rules to open an initial Trump Account by an authorized individual for an eligible child, and rules for who the responsible party is for the initial Trump Account once the account has been opened.
The IRS says these proposed regulations provide useful information for parents and guardians who may want to elect to open an initial Trump Account and for prospective trustees of Trump Accounts.
“Trump Accounts are a pro-family initiative that will help millions of Americans harness the strength of our economy to lift up this generation and generations to follow and unlock the American Dream,” IRS CEO Frank Bisignano said in a statement. “Creating Trump Accounts was one of the most important provisions in President Trump’s historic One, Big, Beautiful Bill, and these regulations are an example of the hard work of Treasury and the IRS in developing the guidance needed to ensure that eligible families can take advantage of Trump Accounts.”
The Treasury Department and the IRS request comments on all aspects of these proposed regulations.
Trump Accounts are a new custodial-style traditional individual retirement account for minors—owned by the child but administered by an adult—created last year by the One Big Beautiful Bill Act.
Recommended Articles
Opening initial Trump Accounts
The proposed regulations provide that the election to open an initial Trump Account must be made by an authorized individual on Form 4547, Trump Account Election(s), or through a separate online portal, Trump Account Election Form – IRS Form 4547, in accordance with applicable instructions. The instructions to Form 4547 are currently available on IRS.gov.
An election to open an initial Trump Account must be made on or before Dec. 31 of the calendar year in which the eligible individual turns 17.
The election form also provides an opportunity for the authorized individual to request the $1,000 pilot program contribution from the Treasury secretary for an eligible child under Section 6434 of the Internal Revenue Code.
If an election for the $1,000 pilot program contribution is made at the same time as the election to open the initial Trump Account, the authorized individual is the individual able to make the election for a pilot program contribution.
If no election for a pilot program contribution is made at the same time as the election to open an initial Trump Account, a different rule applies for determining the authorized individual, the IRS says. Under the proposed ordering rule for who may make the election, the authorized individual would be, in order of priority:
- A legal guardian;
- Parent;
- Adult sibling; then
- Grandparent of the eligible individual.
Responsible party for the Trump Account
In general, the individual who makes the election to open an initial Trump Account for an eligible child will be the responsible party of the initial Trump Account, according to the IRS.
“The responsible party generally will have the authority, while the account beneficiary does not have legal capacity, to select among eligible investments (if more than one eligible investment is offered), request a qualified rollover contribution to a rollover Trump Account, request a transfer for a qualified ABLE rollover contribution (subject to certain rules), or select a successor responsible party for the account,” the tax agency said.
More information on Trump Accounts can be found here.
Thanks for reading CPA Practice Advisor!
Subscribe Already registered? Log In
Need more information? Read the FAQs
