On August 20, 2026, the U.S. Department of the Treasury and the IRS released proposed regulations providing guidance on eligible investments for “Trump Accounts,” the new tax-advantaged individual retirement accounts established under section 530A by the One Big Beautiful Bill Act (OBBBA) of 2025.1
WHY THIS MATTERS
A Trump account is a new type of traditional individual retirement account (IRA) established for children under 18. The account generally grows tax deferred and is subject to special contribution, distribution, and investment rules until the child reaches the age of 18 (the growth period), after which it becomes subject to the normal rules applicable to traditional IRAs.
Section 530A limits Trump account investments during the growth period to eligible investments that meet certain requirements, generally encompassing low-cost, diversified investment vehicles, but the statute leaves several questions unanswered regarding how those requirements should be applied. The proposed regulations provide definitions and objective rules for determining whether a mutual fund or ETF qualifies as an eligible investment and establish procedures trustees may use to ensure ongoing compliance. As a result, taxpayers would have greater certainty regarding permissible investment options for Trump accounts and the administration of these accounts during the growth period.
Proposed Regulations
The proposed regulations provide (1) definitions related to eligible investments, (2) rules for determining whether an investment is an eligible investment, and (3) rules on how a trustee of a Trump account ensures that a Trump account meets requirements concerning eligible investments.
The proposed regulations are proposed to apply to tax years beginning on or after January 1, 2026. Certain provisions relating to trustee procedures regarding eligible investments would apply to tax years beginning on or after the date the proposed regulations are finalized.
KPMG INSIGHTS
The definition of "eligible investment" is an important operational rule for Trump accounts because it significantly restricts what can be held in the account during the growth period. Under IRC § 530A, the account generally cannot be invested like a regular brokerage account or even a typical IRA. Instead, investments must be limited to certain low-cost, broad-based index mutual funds or ETFs that track qualified indices, are unleveraged, and satisfy strict fee limitations.
ENDNOTE:
1 P.L. 119-21; Guidance Regarding Eligible Investments for Trump Accounts, 26 C.F.R. pt. 1, CC-00349938-26; RIN 1545-BS14 (proposed Aug. 2026).
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The above information is not intended to be “written advice concerning one or more federal tax matters” subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
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