IRS Addresses Unanswered Questions about Trump Accounts
As is often the case with new legislation, the One Big Beautiful Bill Act (OBBBA) left unanswered a number of questions about Trump Accounts, the new savings vehicle for children.
Today’s article focuses on how the IRS addressed the unanswered questions:
1. How will Trump Accounts be established?
OBBBA says that a formal election must be made in order to establish a Trump Account. Notice 2025-68 indicates that this election can be made on new IRS Form 4547 or, beginning sometime in the middle of 2026, online through the www.trumpaccounts.gov website. The IRS released a draft Form 4547, but has not yet finalized that form. The IRS Notice says that Form 4547 can be filed with the 2025 federal tax return.
2. How will the $1,000 Federal government contribution become available?
OBBBA requires that someone accepting the $1,000 Federal government contribution on behalf of a child born between 2025 and 2028 must make a separate election. In Notice 2025-68, the IRS says this election can also be made on Form 4547 and eventually through the website. The election to receive the $1,000 for eligible children can be made at the same time as the election to open an initial Trump Account.
3. Will Roth conversions be allowed starting in the year the individual turns age 18?
OBBBA provides that starting in the year a child turns age 18, the usual rules for traditional IRAs apply to Trump Accounts. Notice 2025-68 specifically says that, as a result, Trump Account funds can be converted to a Roth IRA starting in the year the individual turns age 18. A Roth conversion at age 18 would allow for decades of tax-free growth of what could be a substantial account balance. That’s because up to $5,000 (indexed starting in 2028) of up to 18 years’ worth of contributions can be made to Trump Accounts by parents, grandparents or anyone else, even if the child has no earned compensation.
4. Will Trump Account funds be subject to required minimum distribution (RMD) rules?
Notice 2025-68 says that Trump Accounts would be subject to RMDs if the account is maintained until later in life.
5. Is the Trump Account employer contribution limit a lifetime limit or an annual limit?
OBBBA is not clear as to whether the $2,500 per-employee limit (also indexed starting in 2028) on employer contributions is a lifetime limit or an annual limit. In Notice 2025-68, the IRS takes the position that it’s an annual limit.
6. Do employer contributions count towards the $5,000 limit?
Notice 2025-68 confirms that employer contributions count towards the annual $5,000 limit (as indexed) on individual contributions. However, the $1,000 Federal contribution, and any contributions made by tax-exempt organizations, do not count.
By Ian Berger, JD
IRA Analyst
Ed Slott and Company, LLC
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