A Trump Account is legally an individual retirement account (IRA) in the child’s name, but during childhood it is held in a custodial structure. The child is the beneficial owner, while an “authorized individual” (usually a parent or legal guardian) acts as the responsible party/custodian with authority to open the account, direct investments, and handle transfers until the year the child turns 18. Treasury initially designates one or more financial institutions as trustees for these custodial IRAs, after which balances can be rolled over to another eligible provider.
Families claim the Treasury seed by making a Trump Account election on IRS Form 4547. As currently outlined: • Form 4547 is a separate form (“Trump Account Election(s)”) used to (1) establish the account and (2) elect the $1,000 pilot contribution for eligible children. • In practice, the election can be made by filing Form 4547 with the family’s income tax return (paper or e‑file) starting with the 2025 return filing season, or—beginning in mid‑2026—through an online tool at trumpaccounts.gov instead of with a return. So the seed is not claimed automatically on Form 1040; an authorized individual must complete Form 4547 via a tax filing or the online portal.
Treasury has not named specific ticker symbols or fund families for Trump Accounts. Current rules only specify the type of investments allowed during the growth period: • Funds must be mutual funds or ETFs that passively track the S&P 500 or another index of primarily U.S. equities. • They must be unleveraged and have a fund‑level expense ratio no higher than 0.10%. • Treasury will initially select one or more financial institutions to hold all Trump Accounts; later, custodians/responsible parties can roll balances to other eligible index funds at different providers. So as of now, only the investment criteria and structure are known, not the exact index products or managers Treasury will use.
Trump Accounts are tax‑deferred accounts: • Contributions are made with after‑tax dollars and are not deductible. • Earnings inside the account (dividends, interest, capital gains) are not taxed annually; they grow tax‑deferred during the child’s “growth period.” No withdrawals (and thus no income tax) are generally allowed before the calendar year the child turns 18. • After the growth period, the account is treated like a traditional IRA: withdrawals are taxed as ordinary income to the beneficiary, except for amounts attributable to the child’s own after‑tax contributions (“basis”), which are not taxed. • Government seeds, employer contributions, and qualified general contributions do not create basis, so those amounts (and their earnings) are fully taxable when withdrawn; early withdrawals before age 59½ can also trigger the standard 10% IRA penalty unless an exception applies. So earnings are not taxed to the account or child while they remain invested; tax is owed only when money is taken out later, under traditional‑IRA rules.
Current law and guidance set only a high‑level framework for private and philanthropic top‑ups; detailed auditing and anti‑misuse procedures have not yet been fully specified. Key points so far: • Large philanthropic or governmental “qualified general contributions” must flow through eligible entities (the U.S. government, states/localities, tribal governments, or 501(c)(3) charities) and must be made to a defined “qualified class” of beneficiaries (for example, all eligible children in certain ZIP codes or birth years), not hand‑picked individuals. Michael and Susan Dell’s $6.25 billion pledge is structured this way. • Such contributions are deposited directly into Trump Accounts held at Treasury‑designated trustees and are tracked separately from the child’s own $5,000 annual contribution cap. • Financial institutions administering Trump Accounts must have procedures to enforce annual contribution limits and track sources of funds, and Trump Accounts are subject to IRA‑style reporting to the IRS. However, Treasury and IRS have only requested comments and announced that more regulations are forthcoming; they have not yet detailed how philanthropic flows will be audited, how conflicts will be monitored, or what enforcement mechanisms will specifically address inequitable distribution beyond the “qualified class” rules.
Eligibility has two layers:
The “50 State Challenge” is a Treasury‑led philanthropic campaign tied to Trump Accounts. As described so far: • It is a voluntary initiative inviting major donors and foundations in each state to commit funds that will be contributed to Trump Accounts for children in that state, typically as “qualified general contributions” (for example, a flat top‑up amount for all eligible children in certain ZIP codes or age ranges). • Ray Dalio has been announced as the first participant, representing Connecticut; his commitment will provide additional funding for Trump Accounts for children across Connecticut, on top of the federal $1,000 and any other contributions. • Treasury has not yet published detailed, binding rules on how each state’s challenge funds are allocated within the state beyond the existing “qualified class” framework (contributions must be to defined groups rather than to individually selected children), so implementation details may vary as more donors and states join. In short, the Challenge is a state‑by‑state philanthropic top‑up competition layered on the national Trump Accounts structure, not a separate legal program with its own statutory rules.