IRS Proposes Trump Account Investment Rules (2026)

What just came out?

On August 21, 2026, the IRS and Treasury published proposed regulations in the Federal Register (document 2026-17123) titled Guidance on Eligible Investments for Trump Accounts (docket CC-00349938-26, RIN 1545-BS14). The proposed rules would live in Treas. Reg. §1.530A-3.

The package builds on IRS Notice 2025-68 and responds to stakeholder comments on how to define eligible mutual funds and ETFs during the Trump Account growth period.

Primary source: Federal Register document 2026-17123. PDF: govinfo PDF.

Who this affects

• Parents and guardians who want a plain-English map of what can sit in the account before age 18
• Trustees and brokers (including future / rollover trustees) that must keep accounts in eligible investments
• Tax preparers explaining growth-period vs post-conversion IRA rules

How this relates to the official lineup

Treasury already announced the initial funds in sb0551: default SPYM, plus additional options IVV, VTI, SPTM, ITOT. See investment lineup.

This NPRM does not replace that list. It sets the legal tests a mutual fund or ETF must meet to be an “eligible investment,” and procedures for trustees — including when families move to another custodian later.

What counts as an eligible investment?

Under proposed §1.530A-3, an eligible investment is generally a mutual fund or ETF that:

1. Tracks a qualified index — designed to measure a broad segment of the U.S. or global equity market using objective financial criteria (all-equity; primarily U.S. companies).
2. Does not use leverage — borrowings/derivatives that materially increase risk of loss are out; routine index-replication tools that do not materially raise risk are not treated as disqualifying leverage.
3. Keeps annual fees and expenses ≤ 0.1% of the fund balance — including fund-level transactional charges (loads, redemption fees, and similar). Separate trustee/custodial account fees are not inside this 0.1% fund-fee cap.

A 90% U.S. weight safe harbor remains: an index is treated as primarily U.S. companies if domestic corporations are at least 90% of the index by weight.

The proposal also clarifies that “ETF” can include ETF share classes of mutual funds that operate like ETFs under SEC exemptive relief, and that securities lending is allowed if the fund keeps full economic exposure to the lent securities.

ESG funds are out

Proposed §1.530A-3(e)(3) states that any investment fund that tracks an ESG index is not an eligible investment. An ESG index includes any index that has, or is marketed as having, a focus on environmental, social, or governance factors.

Industry- and sector-specific indexes remain ineligible. Stay factual: this is an eligibility rule in a proposed tax regulation, not investment advice.

Growth period timing (age 17 vs “age 18”)

Parents often hear “locked until 18.” The proposal lines up with the statute’s growth-period definition:

• The growth period ends on December 31 of the calendar year in which the account beneficiary reaches age 17.
• Eligible-investment rules apply to assets held before the first day of the calendar year in which the beneficiary turns 18.
• After the growth period, those special investment limits no longer apply; the account follows ordinary IRA rules at conversion.

Shorthand “until 18” is still useful for parents. The precise cutoff is the growth-period / calendar-year rule above. More: what happens when a child turns 18.

Trustee monitoring and 30-day fixes

• Annual safe harbor: trustees that check eligibility at least once every 12 months (and may rely on prospectuses / required securities filings) generally satisfy ongoing monitoring.
• If a fund becomes ineligible: the trustee must generally sell and reinvest in an eligible alternative within 30 calendar days.
• Administrative errors: if procedures exist but assets land in the wrong place by mistake, the proposal includes a 30-day correction path plus disclosure to the beneficiary.
• Operational compliance matters: holding an ineligible investment can cause the account to cease to be a Trump Account (and cease to be an IRA under §408(a)) as of the first day it holds the ineligible asset — which is why the monitoring rules exist.

Comment period

• Comments and hearing requests: due by October 20, 2026.
• Submit via regulations.gov (indicate IRS and CC-00349938-26).

Proposed effective date: taxable years beginning on or after January 1, 2026 (trustee operational procedures in paragraph (g) would apply for years beginning on or after final-reg publication). Taxpayers and trustees may rely on the proposed regulations before finalization if they follow them in their entirety and consistently.

What this does not change for parents today

• You still open via IRS Form 4547 / trumpaccounts.gov and activate in the official app.
• At launch, money still defaults to SPYM until Treasury enables elections among the additional lineup funds.
• This is a different package from the August 11 employer §128 NPRM (REG-101355-26). Employer deep dive: proposed employer rules.

Related: investment rules overview · index fund requirements · investments FAQ · fees.

Sources: Federal Register document 2026-17123, govinfo PDF, Treasury sb0609, U.S. Treasury Press Release sb0551, IRS Notice 2025-68. Educational content only — not tax or financial advice.