Six Unanswered Questions on Trump Accounts
As with most new laws, there are a number of unanswered questions about Trump accounts that need to be addressed by the IRS. Fortunately, since Trump account contributions can’t be made before July 4, 2026, the IRS should have enough time to issue guidance. Here are some of the outstanding questions:
1. How will Trump accounts be established?
OBBBA says that a Trump account can be established by the Federal government or by any person. However, if a person opens up a Trump account, it must be funded by a direct transfer of 100% of the funds from another Trump account. This seems to require that a child’s first Trump account must be established by the Federal government, but the IRS must clarify this. Also, the IRS must tell us how a person can establish a Trump account.
2. How will elections be made?
OBBBA calls for an election to be made by an individual to accept the $1,000 Federal government contribution on behalf of an eligible child. However, there are no details as to how this election will be made. There has been speculation that it can be made as part of the parents’ federal tax return, but official guidance is needed.
3. Will Roth conversions be allowed starting in the age-18 year?
OBBBA is clear that beginning in the year the child turns age 18, Trump account contributions made before the age-18 year (and earnings) automatically assume the normal traditional IRA rules. (Those rules also apply to any contributions made to a Trump account in the calendar year the child turns 18 or later years.) This would suggest that Trump account funds can be converted to a Roth IRA starting in the age-18 year. A Roth conversion would be a great opportunity since it would allow for decades of tax-free growth on the Trump account funds. Hopefully, the IRS will confirm that a Roth conversion is possible.
4. Will Trump account funds be subject to required minimum distribution (RMD) rules?
If Trump account funds take on the usual IRA rules in the age-18 year, it would stand to reason that they become subject to the RMD rules if the account owner holds it until later in life. Yet, there has been some uncertainty over whether the RMD rules do apply.
5. Is the employer Trump account contribution limit a lifetime limit or an annual limit?
OBBBA also allows for employer-provided contributions to Trump accounts for teenage employees and dependents of employees before the year they turn age 18. There is a $2,500 limit on these contributions. Read literally, OBBBA says that this is a lifetime limit per employee – not an annual limit (like the $5,000 limit on Trump account contributions made by parents, grandparents or others). However, some commentators have described this as an annual limit.
6. Do employer contributions count towards the $5,000 limit?
OBBBA specifically says that the $1,000 Federal government contribution doesn’t count towards the $5,000 annual maximum. The same is true for any contribution made by a tax-exempt organization. But OBBBA does not say that employer contributions don’t count. We think Congress may have made a drafting error and really intended that employer contributions also don’t count towards the $5,000. It would be an administrative nightmare for employer contributions to be coordinated with contributions from parents and others. We hope to hear more from Congress or the IRS on this.
By Ian Berger, JD
IRA Analyst
Ed Slott and Company, LLC
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Christian Cordoba, founder of California Retirement Advisors, has been a member of Ed Slott's Master Elite IRA Advisor Group since 2007.