Trump Accounts
A few weeks ago, I reminisced about funding a savings account by rolling pennies. Since pennies are no longer in production, today I will be talking about another way to save for a child's future. H.R. 1, or the One Big Beautiful Bill, introduced Trump accounts in Section 70204.
What is a Trump account?
A Trump account is something of a cross between an IRA and a 529 college savings account. It is a tax-deferred account which can be established on behalf of a child under the age of 18. $5,000 a year can be added through a variety of ways including contributions from the parents, the parents' employers, the government, and even the child for whom the account was established. The bill also establishes a pilot program that will deposit a one-time grant of $1,000 if the child for whom the account is established is born between January 1, 2025 and December 31, 2028. Once the child has turned 18, they may withdraw funds from this account for educational expenses, home ownership, entrepreneurship, and other designated purposes.
The statute requires the balance to be invested in an "eligible investment." It later defines eligible investments as mutual funds or exchange traded funds which track the returns of a qualified index, does not use leverage, and does not have annual fees and expenses of more than 0.1 percent of the balance of the fund, and meets other criteria as the Secretary of the Treasury deems appropriate. Because 12 CFR 724.1 requires federal credit unions to invest tax-advantaged savings accounts in share accounts and share certificate accounts, the requirement to use an "eligible investment" means the credit union will have to work with a CUSO or third-party to access those investments.
New Guidance
The IRS recently released some additional guidance and a draft form for opening these accounts. Notice 2025-68, "Notice of intent to issue regulations with respect to section 530A Trump accounts," was published on December 2, 2025. It discusses a number of issues including Establishment, Pilot Program, Contributions, Eligible Investments, Distributions, Reporting, Coordination with IRA Rules, Qualified General Contributions, and Section 128 Employer Contributions. There are questions and answers for each section and the Treasury Department and IRS request comments on the regulations and certain questions. Comments must be submitted by February 20, 2026.
Draft form 4547 gives us a sense of what the final form for opening an account may resemble. The draft form is one page and asks for standard information. One thing to remember is that the eligible child must be a U.S. citizen and will need a social security number before an account may be opened. An online tool for making the election is expected to be available on https://trumpaccounts.gov/ by mid-2026. If the election is made before this, for example, filed with one's 2025 taxes, more information regarding activation will be starting in May 2026. No contributions may be made before July 4, 2026.
Here are some key issues affecting credit unions that are discussed in the guidance:
Initial Accounts and Rollovers
According to the guidance, the Treasury Department will create the initial Trump account and place it with a financial institution. The Treasury Department will select one or more financial institutions to serve as the initial trustee/s of the Trump Accounts.
While initial Trump Accounts will be concentrated in a few financial institutions, Trump accounts can be moved to another financial institution or nonbank trustee through the establishment of a rollover account. The rollover account must be funded by the full amount of the existing Trump account, which must be closed within a reasonable time after establishment of the rollover account. Per the IRS' guidance, "[a] receiving trustee will be required to have procedures in place to confirm that the first contribution to the rollover Trump account is a qualified rollover contribution."
Rollovers include significant reporting requirements. Under 530A(i)(2), the trustee of the rollover account must, within 30 calendar days, provide an electronic report to the Treasury Department or its agent. The Treasury is seeking comment on ways to reduce this burden through automatic reporting and a proposed reporting format. In addition, the original (transferring) trustee must provide a report to the receiving trustee identifying the account as a Trump account and providing information regarding the basis in the transferred Trump account and the contributions received by the transferring trustee for the calendar year in which the qualified rollover contribution occurs. No particular form or format would be recommended for these trustee-to-trustee reports.
Growth Period
The guidance discusses the concept of a "growth period" which is the time between when the account is initially funded and January 1 of the year the beneficiary turns 18. During the growth period, up to $5,000 may be added annually, with that amount receiving a cost-of-living adjustment after 2027. After the growth period, the Trump account is treated as an IRA for withdrawals and may be rolled over into an IRA or other eligible retirement account.
Trustees
The question and answer portion states that a trustee must be a bank, (as defined in 408(n), which includes an insured credit union) or other person who is approved by the IRS to be a nonbank trustee of a Trump account. Any person approved by the IRS as of December 31, 2025, to be a nonbank trustee of an IRA under section 408(a) is automatically approved to be a nonbank trustee of a Trump Account.
The Treasury will choose financial institutions to serve as a trustees of the initial Trump accounts. Under 26 USC 530A(g), the Secretary shall take into account the following when choosing a trustee: (1) The history of reliability and regulatory compliance of the trustee; (2) The customer service experience of the trustee; and (3) The costs imposed by the trustee on the account or the account beneficiary. Our Advocacy Team has written to the Treasury Department to request credit unions be considered as trustees.
And Much More
This blog just touches on some of the many provisions discussed in the IRS guidance. For additional questions, please reach out to compliance@americascreditunions.org.