On August 20, 2026, Treasury and the IRS issued proposed regulations (IR-2026-96, Prop. Reg. §1.530A-3) defining what a Trump Account may actually hold. Coverage focused on the fee cap. The more consequential detail is what the rules exclude — and the specific date the exclusions stop applying.
What Counts as an Eligible Investment
During the growth period, an eligible investment is a mutual fund or ETF that tracks an equity index of primarily U.S. companies, does not use leverage, and charges annual fees of no more than 0.1% of the investment's balance.
The proposal fills in what "primarily U.S." and "equity" mean:
- A 90% safe harbor. The index must be at least 90% domestic corporations by weight.
- All equity. Debt instruments in the index disqualify it, which rules out balanced and target-date funds.
- No sector or industry funds.
- No ESG. The regulations exclude any index that "has, or is marketed as having, a focus on environmental, social, or governance factors."
- Leverage only for replication. Routine borrowings or derivatives used to track the index are permitted so long as they do not materially increase the risk of loss.
By 401(k) Specialist's count, five ETFs currently clear every test — SPYM, IVV, VTI, SPTM, and ITOT. SPYM is the designated default. If a beneficiary selects nothing, the trustee invests the account in an eligible fund of its choosing.
The Fee Cap Has a Documented Gap
The 0.1% ceiling is broad within the fund. It captures "all amounts that the fund charges its investment fund holders directly, without regard to how such amounts are computed, when they are imposed, or how such amounts are referred to," including sales loads and redemption fees.
What it does not capture: custodial fees, administrative account charges, and personal advisor fees. Those are trustee fees, and they sit outside the cap entirely. An account can hold a 0.03% fund and still be expensive. Compare trustees on their fee schedules, not on the ceiling.
The Handoff Date Is the Planning Event
The growth period ends on December 31 of the calendar year the beneficiary turns 17. After that, the eligible-investment restrictions no longer apply, and the account is generally treated as a traditional IRA — subject to ordinary rules for contributions, distributions, rollovers, Roth conversions, and eventual RMDs.
That transition is abrupt. For up to 18 years the account is, by law, a single asset class: U.S. large-cap equity, with no bonds, no international exposure, and no diversifying assets of any kind. Then every option a traditional IRA permits opens at once.
The mandate is a low-cost default for a long-horizon account owned by a child. It is not a model for a retirement portfolio, and it should not be read as one.
Practical Takeaways
- Diversify around the account, not inside it. During the growth period you cannot rebalance it. Treat the Trump Account as the U.S. equity sleeve of the household allocation and place bonds, international, and alternatives elsewhere.
- Write down the handoff year. The January after the beneficiary turns 17 is when allocation decisions become possible — and when a Roth conversion first becomes worth modeling, while the account holder's income is likely at a lifetime low.
- Read the trustee's fee schedule separately. The 0.1% cap tells you nothing about custodial costs.
- Comments are open until October 20, 2026. These are proposed rules, not final ones, though taxpayers may rely on them now if they do so consistently.
Sources: IRS Newsroom (IR-2026-96); Proposed Treasury Regulation §1.530A-3 (CC-00349938-26, RIN 1545-BS14); 401(k) Specialist; Current Federal Tax Developments; Congressional Research Service R48910; Center for Retirement Research at Boston College