The One, Big, Beautiful Bill Act of 2025 significantly altered the tax landscape for early childhood wealth building with the creation of Internal Revenue Code (IRC) Section 530A, introducing "Trump Accounts". Recently, the Treasury Department and the IRS issued proposed regulations (REG-117270-25) providing critical definitions and outlining the mechanics of electing to open an initial Trump account.

(Note: The legislation also enacted a related $1,000 contribution pilot program under IRC § 6434; however, the scope of this article is strictly limited to the foundational rules and definitions of the Trump Accounts themselves under IRC § 530A. A separate article will discuss the proposed regulations related to the Trump Accounts that were issued at the same time as these regulations.)

Here is a technical breakdown of the proposed regulations, drawing from both the regulatory preamble and the text of the proposed regulations, to guide practitioners in advising clients.

Classification and Structure of Trump Accounts

At its core, a Trump account is a specialized form of a traditional Individual Retirement Account (IRA) established for the exclusive benefit of an eligible individual. Under IRC § 530A(a), the account is broadly treated in the same manner as a traditional IRA under IRC § 408(a). However, Prop. Reg. § 1.530A-1(b)(1) clarifies that a Trump account cannot be established as a SIMPLE IRA under IRC § 408(p) and is prohibited from receiving simplified employee pension (SEP) contributions under IRC § 408(k).

The proposed regulations bifurcate these accounts into two exclusive types under Prop. Reg. § 1.530A-1(b)(2)(i):

Initial Trump Account: This is the eligible individual’s first account, which must be created or organized by the Secretary of the Treasury pursuant to a taxpayer election. This aligns with the statutory mandate in IRC § 530A(b)(1)(A)(i).
Rollover Trump Account: After an initial account is opened, an individual may open a subsequent account, provided it is funded entirely by a "qualified rollover contribution"—a direct trustee-to-trustee transfer of the entire account balance from the beneficiary’s prior Trump account, as defined in IRC § 530A(e). A taxpayer may only maintain one funded Trump account at a time.

Additionally, the governing instrument must formally designate the account as a Trump account at inception under IRC § 530A(b)(1)(B), and Prop. Reg. § 1.530A-1(b)(2)(iv) strictly prohibits the retroactive amendment of an existing traditional IRA into a Trump account.

The "Growth Period"

The preamble and Prop. Reg. § 1.530A-1(b)(4)(iv) introduce a crucial new term of art: the "Growth Period." This period begins on the date the initial account is established and ends on December 31 of the calendar year in which the account beneficiary attains age 17.

During the Growth Period, special statutory rules supersede general IRA principles. These include specialized constraints on contributions (IRC § 530A(c)), investments (IRC § 530A(b)(3)), and early distributions (IRC § 530A(d)). Once the Growth Period concludes (January 1 of the year the beneficiary turns 18), the Trump account generally defaults to standard traditional IRA rules under IRC § 408, with limited exceptions such as the continued ban on SEP and SIMPLE contributions. Note: Treasury has reserved Prop. Reg. §§ 1.530A-2 through 1.530A-6 to issue operational guidance on these specific areas at a later date.

Who is an Eligible Individual?

To open an initial Trump account, the beneficiary must meet the definition of an "eligible individual" under IRC § 530A(b)(2) and Prop. Reg. § 1.530A-1(b)(4)(iii). The individual must:

Not have attained age 18 before the end of the calendar year the election is made.
Be issued a valid Social Security Number (as defined in IRC § 24(h)(7)) prior to the date the election is made.
Have a formal election made on their behalf.

Planning Tip: For the purposes of these age limitations, Prop. Reg. § 1.530A-1(b)(5) explicitly adopts the "birthday rule," affirming that an individual attains a specific age exactly on their birthday.

Election Procedures

The framework for electing to open an Initial Trump account under IRC § 530A(b)(2)(C) is strictly proceduralized to prevent multiple accounts for the same child.

Who can make the election?

Under Prop. Reg. § 1.530A-1(c)(1)(i)(B), if a pilot program election is not being made, an "authorized individual" must make the election. The regulations establish a strict priority ordering rule: the legal guardian has first priority, followed by a parent, an adult sibling, and finally a grandparent. If two people hold the same priority level (e.g., two parents), either may file the election, and the first to file prevails. The individual files under penalties of perjury that no higher-priority person is available.

To shield the beneficiary from losing account status due to an invalid election, Prop. Reg. § 1.530A-1(c)(1)(ii) establishes a safe harbor: if an unauthorized person manages to make the election, the Secretary is deemed to have made the election instead, ensuring the account remains a valid Trump account.

Time and Manner of Election

Under IRC § 530A(b)(2)(A) and Prop. Reg. § 1.530A-1(c)(2), the election must be made on or before December 31 of the year the child attains age 17. Prop. Reg. § 1.530A-1(c)(3) states the election will be made on Form 4547, Trump Account Election(s), or via an IRS electronic application. Practitioners should note this election is independent of the taxpayer’s Form 1040, even if filed concurrently.

Responsible Party and Trustee Rules

Because minors lack the legal capacity to enter binding financial agreements, the Secretary must designate a "responsible party." Under Prop. Reg. § 1.530A-1(d), the default responsible party is the authorized individual who makes the election to open the account. This party exercises authority over selecting eligible investments, directing qualified rollovers, and selecting successor responsible parties, subject to prevailing state law and the account agreement.

Regarding trustees, IRC § 408(a)(2) requires IRA trustees to be banks or approved nonbank trustees. To streamline administration, Prop. Reg. § 1.530A-1(b)(2)(iii) provides automatic approval to serve as a Trump account nonbank trustee to any entity already approved by the IRS as a nonbank IRA trustee as of December 31, 2025.

Effective Dates & What Taxpayers Should Do Pending Final Regulations

Effective Date: According to Prop. Reg. § 1.530A-1(e), these rules are proposed to apply to taxable years beginning on or after January 1, 2026. The Treasury intends to finalize these regulations within 18 months of the passage of the enabling legislation.

Pending Final Regulations: Notice 2025-68 was previously issued to inform taxpayers of the forthcoming regulations and to request comments. The preamble to these proposed regulations states that public comments submitted in response to Notice 2025-68 that were not received in time to be integrated into this proposed text will be heavily considered during the drafting of the final regulations.

While the regulations are still in the proposed stage, taxpayers and practitioners should act proactively:

Identify Eligible Dependents: Begin evaluating which dependents meet the "eligible individual" definition and ensure they are issued Social Security Numbers well in advance of a planned election.
Determine Priority: Because the Prop. Reg. § 1.530A-1(c)(1)(i)(B) ordering rule heavily prioritizes the legal guardian and parent, families should coordinate to ensure the correct "authorized individual" files the future Form 4547.
Submit Comments: Treasury specifically requests industry comments on whether to expand the definition of "authorized individual" to include other relationships under IRC § 152(c)(2), how to handle wards of the state, and whether the nonbank trustee net worth requirements should be modified. CPAs and EAs encountering unique family dynamics or serving institutional trustees should submit formal comments via the Federal eRulemaking Portal within 60 days of the proposed regulations’ publication in the Federal Register.

Prepared with assistance from NotebookLM.