On August 21, 2026, the US Internal Revenue Service (IRS) and Treasury published a notice of proposed rulemaking that defines which investments Trump Accounts may hold during their growth period, the first federal guidance on the account's investment parameters since Congress created the vehicle last summer. The proposed regulations under section 530A of the Internal Revenue Code (FR Doc. 2026-17123, RIN 1545-BS14, 26 CFR Part 1) would restrict Trump Account funds to low-cost, passive, unleveraged mutual funds and exchange-traded funds (ETFs) that track a broad US equity index, with annual fees capped at 0.1 percent of the balance.
Comments are due by October 20, 2026, and the rules are proposed to apply to tax years beginning on or after January 1, 2026. The proposal affects IRA trustees, mutual fund and ETF sponsors, broker-dealers and banks building Trump Account investment menus, who must redesign their eligible-investment criteria and trustee disposal procedures before the comment close.
What can a Trump Account invest in under the proposal?
Under proposed section 1.530A-3, the only permissible Trump Account investments during the growth period, from account opening through December 31 of the calendar year in which the beneficiary turns 17, are mutual funds and ETFs that satisfy four cumulative tests.
| Eligible investment test | What the proposed rule requires |
|---|---|
| Form of entity | A mutual fund or ETF registered under the Investment Company Act of 1940. The ETF definition expressly covers ETF share classes of mutual funds and unit investment trusts operating under SEC exemptive relief. |
| Index tracking | The fund must seek to replicate a qualified index. Actively managed funds, funds aiming to outperform an index, and inverse funds are ineligible. A fund need not hold every index constituent, and securities lending is permitted if the fund retains full economic exposure to the securities lent. |
| No leverage | Borrowings, derivatives or economically equivalent strategies may not materially increase the risk of loss. Routine liquidity borrowing for redemptions and derivatives used to gain synthetic index exposure are allowed. |
| Fee cap | Annual fees and expenses may not exceed 0.1 percent of the investment balance. |
Which indices qualify, and are ESG funds allowed?
A qualified index is the S&P 500 or another all-equity index of primarily US companies that has regulated futures contracts traded on a qualified board or exchange. Sector and industry-specific indices are excluded, and funds tracking ESG indices are not eligible investments even though the IRS no longer labels ESG indices "sector-specific".
Several features narrow the field further. An index must be all-equity, so indices containing debt components cannot qualify. A 90 percent safe harbor treats an index as "primarily US" when US companies represent at least that share by weighting, while total-market and market-capitalization-based indices can qualify if they meet the other tests. A fund of funds may be eligible only if it tracks a single index; funds that replicate multiple indices are excluded.
The ESG exclusion is the line most sponsors will need to check. Under the authority of section 530A(b)(3)(A)(iv), the proposal provides that any fund tracking an ESG index, including one with, or marketed as having, an environmental, social or governance focus, is not an eligible investment, because it limits exposure in a way that makes it similar to a sector-specific fund.
What must trustees do about ineligible holdings and reporting?
The NPRM sets out trustee procedures to keep Trump Accounts invested solely in eligible investments, including how to dispose of any ineligible asset and the associated reporting. Trustees holding funds that fail any of the four tests, or that track an ESG, sector-specific or multi-index strategy, will need a disposal process and documentation ready before the rules take effect.
Two open comment items bear on trustee economics. The IRS requests comments on whether stock contributed as part of a philanthropic contribution should be treated as an eligible investment, and on trustee fees, since section 530A(g)(3) directs the Secretary to take trustee costs into account when selecting the account trustee. The contact for the proposed regulations is Justin R. Karlin at (202) 317-6842.
What is the timeline, and what should affected firms do now?
Written or electronic comments and public hearing requests must be received by October 20, 2026, submitted via the Federal eRulemaking Portal under docket CC-00349938-26. The proposal builds on Notice 2025-68, whose comment period closed February 20, 2026, and on the March 9, 2026 proposed rules on general account opening (REG-117270-25) and the one-time USD 1,000 pilot contribution under section 6434 (REG-117002-25).
Continuous, per-jurisdiction real-time monitoring surfaces this kind of proposed rule the moment the IRS publishes it, before final guidance reshapes the product shelf.
Take advantage of this real-time watch
For trustees, fund sponsors and broker-dealers, the operational to-do list is concrete: map every product on the Trump Account shelf against the four tests and the ESG exclusion, flag any fund that tracks an ESG or sector-specific index for disposal, confirm the 0.1 percent fee cap, and prepare submission of comments on the stock-contribution and trustee-fee questions by the October 20 deadline. Verify applicability for your tax year, check the comment deadline against your review cycle, and brief the trustee, product and tax counsel teams on the disposal and reporting procedures the proposal will require.
