Treasury Says a Trump Account Can Hold Almost Nothing but a Cheap Index Fund

Treasury and the IRS issued proposed regulations on August 20 answering a narrow but consequential question about Trump Accounts: what can the money actually be invested in? The answer is deliberately restrictive. During what the rules call the growth period, a Trump Account may hold only mutual funds or exchange-traded funds that track a U.S. equity index — the S&P 500 is the named example — and those funds must be non-leveraged and must charge annual fees no greater than 0.1% of the fund balance.

What a Trump Account is

A Trump Account is a new type of traditional IRA created under the Working Families Tax Cuts. It is set up for a child, who must have a Social Security number, and the election to establish one must be made before the calendar year in which the beneficiary turns 18. Accounts can be opened through the IRS Individual Online Account using Form 4547. A pilot program provides a $1,000 contribution for U.S. citizens born between 2025 and 2028.

Because it is structurally an IRA, the account carries IRA plumbing — which is why the investment question needed answering at all. An ordinary IRA can hold nearly anything a custodian will custody. These accounts cannot.

The growth period, and what happens after it

The growth period runs from the account's establishment through December 31 of the year the beneficiary turns 17. The investment restrictions apply only during that window. Once it ends, the proposed rules do not limit what the account may hold.

• Eligible during the growth period: mutual funds and ETFs tracking a U.S. equity index, such as the S&P 500.
• The fund must be non-leveraged.
• Annual fees may not exceed 0.1% of the fund balance.
• After the growth period ends, the investment restrictions no longer apply.
• Related earlier guidance: IRS Notice 2025-68, issued December 2025.

Reading the fee cap

A 0.1% annual expense limit — 10 basis points — is a meaningful constraint written into the eligibility test rather than left to the account holder. Broad U.S. index funds priced at or below that level are common; actively managed funds, sector funds and most thematic products are not. The effect of the rule is to make the account's investment menu resemble a default rather than a choice, which is a design decision about what these accounts are for, not an incidental technical detail.

Employers can contribute too

A companion set of proposed regulations issued August 11 covers employer contributions. An employer may contribute up to $2,500 a year tax-free to the Trump Account of an employee or an employee's dependent. To do so it must maintain a separate written plan benefiting employees exclusively, and eligibility, contributions and benefits under the program must not discriminate in favor of highly compensated employees or their dependents. Comments on that set are due September 25, 2026, with a public hearing scheduled for October 15.

Dates that matter

1. August 11, 2026 — proposed regulations on employer contributions issued.
2. August 20, 2026 — proposed regulations on eligible investments issued.
3. September 25, 2026 — comments due on the employer contribution rules.
4. October 15, 2026 — public hearing on the employer contribution rules.
5. October 20, 2026 — comments due on the eligible investment rules.