The IRS and Treasury have issued proposed regulations for Trump accounts (also called 530A accounts), the new child savings accounts created by the One Big Beautiful Bill Act (OBBBA) President Donald Trump signed last July.

The proposed regulations are divided into two parts. One details how to open and manage Trump accounts. The other explains how the program’s one-time $1,000 federal pilot contribution will function. Treasury issued two separate sets of proposed regulations because OBBBA added two different Code sections—one governing the accounts themselves and another governing the $1,000 federal contribution.

Here’s what you need to know.

How Do I Open A Trump Account?

You can open a Trump account with an election on Form 4547 or electronically.

Even though there’s a tax form available to make the election, it’s considered separate from your tax return. You can submit the form when filing your return (beginning this tax season for the 2025 tax year), file it independently, or use the online portal. The election must be made by December 31 of the year the child turns 17.

The proposed regulations also stress that the election must be made “in the manner prescribed by the Secretary,” meaning on the official form or online according to the rules. A Trump account will not be opened unless the election is submitted using the required process. In other words, there’s no backdoor way to sign up and an account won’t be automatically opened without you making an election.

Once the IRS processes the first valid election, the process is effectively locked. Only one Trump account per child can be created, and any later elections for the same child will not be processed.

Even if you make an election now, you can’t jumpstart the account just yet. No contributions of any kind—whether from parents, employers, or the government—can be made before July 4, 2026. That includes the $1,000 pilot contribution from Uncle Sam.

Are Trump Accounts The Same As An IRA?

A Trump account isn’t a retirement plan at the start, but it works like a traditional IRA set up for a child. However, it operates under a special set of rules during the period before the child turns 18. That period—called the growth period—begins when the account is established and ends on December 31 of the calendar year in which the beneficiary turns 17. During that time, the account is subject to strict rules governing contributions, investments, distributions, and reporting.

After the growth period ends, most of those special rules no longer apply, and the account generally functions like a traditional IRA.

(You can see how it stacks up against other savings options here.)

Who Is Allowed To Open The Account?

The proposed regulations use the term “authorized individual” to describe who can make the election to open an initial Trump account. That definition depends on whether the person filing Form 4547 is also requesting the $1,000 pilot program contribution.

If the pilot contribution election is made at the same time, the authorized individual must be the person eligible to make that election—usually someone who expects the child to be their qualifying child for tax purposes.

If the pilot contribution election is not being made at the same time, the proposed regulations set a priority order for who can open the account. This order is based on a family hierarchy: first a legal guardian, then a parent, followed by an adult sibling, and finally a grandparent.

If more than one person shares the same priority—such as two parents—either can make the election. In these cases, the authorized individual must confirm that they meet the ordering rule and that no one with a higher priority is available to make the election.

What Happens If The Wrong Person Files?

If someone who is not actually authorized submits the election, rather than invalidating the account, the proposed regulations treat the election as if the Secretary of the Treasury had made the election. In other words, the account remains valid even though the original filer technically lacked authority to open it.

The IRS seems to have adopted this approach to prevent issues that could occur if an account needed to be undone after it was already created.

Who Is The Responsible Party?

Because the account beneficiary is a minor, someone must act on the child’s behalf to manage the account. The proposed regulations refer to that person as the responsible party.

In most cases, the person who opened the account will be the responsible party. That person can select among eligible investments, direct a rollover to another Trump account, arrange certain rollovers to ABLE accounts (Achieving a Better Life Experience accounts designed for individuals with disabilities), and designate a successor responsible party.

The proposed regulations also make clear that the process for removing or replacing a responsible party will be governed by state law or the account agreement with the trustee.

How Much Can I Put In The Account?

Trump Accounts come with a $5,000 annual contribution limit, adjusted for inflation after 2027. But that limit doesn’t apply to all contributions.

The $5,000 cap includes contributions made by employers under a special employer program and to contributions made by individuals such as parents or grandparents.

Employer contributions, which are included in the $5,000 cap, can’t exceed $2,500 per year (adjusted for inflation). The good part? They are excluded from taxable income.

Other contributions fall outside the $5,000 cap. These include the $1,000 pilot program contribution, qualified general contributions made by governments or charities, and certain rollover contributions. Those amounts do not reduce the $5,000 annual limit available for family or employer contributions.

Some contributions—including the federal pilot contribution, qualified general contributions, and employer contributions—do not create basis in a Trump Account. By contrast, contributions made by parents, grandparents, or others with after-tax dollars do create basis.

When Can I Take Out The Money?

Because Trump accounts are intended as long-term savings plans, distributions are generally prohibited while the beneficiary is under 18. The only permitted withdrawals during this period are limited to specific circumstances, such as rolling the account into another Trump account, correcting excess contributions, or distributing the account upon the beneficiary’s death. The instructions also allow certain qualified rollovers, including limited rollovers to ABLE accounts once the beneficiary reaches age 17.

Hardship withdrawals are not permitted, and you can’t simply close the account and distribute it because your circumstances have changed.

However, once the beneficiary turns 18, most of these restrictions fall away, and the account begins to operate much like a traditional IRA.

Do I Have To Apply Separately For the $1,000 Pilot Contribution?

Yes, you have to apply separately for a Trump account and the pilot contribution. Opening a Trump account does not automatically trigger the program’s one-time $1,000 federal contribution. The contribution is part of a separate pilot program, and a specific election must be made to request it. The federal contribution requires a child to meet more restrictive eligibility requirements.

That said, you can make the elections for both (opening an account and the $1,000 pilot contribution) on the same form, Form 4547.

Who Qualifies For The $1,000 Pilot Contribution?

A child qualifies for the pilot contribution only if the child is born in calendar year 2025, 2026, 2027, or 2028, and is a United States citizen with a Social Security number (the SSN must be issued before the election is made). Additionally, no prior pilot program election may have been made and processed for that child.

The “processed” part matters. A child won't be disqualified just because someone tried to file an earlier election that turns out to be invalid.

To make the election, the person requesting the pilot contribution must anticipate that the child will be their qualifying child for the tax year in which the election is made. This allows parents or guardians to make the election during the year rather than waiting until the end of the tax year.

The proposed regulations also provide flexibility. An election remains valid even if it later turns out that the child does not meet the qualifying-child rules for that year, as long as the person making the election reasonably anticipated that the child would qualify.

How Do I Get The $1,000?

There’s an interesting twist in how the federal contribution is delivered. Instead of depositing money directly into the account, the rules consider the child as having made a payment toward federal income tax.

Mechanically, here’s how it works: Once a pilot program election is processed, the child is considered to have made a $1,000 payment toward their federal income tax liability. Since most children have no tax liability, this payment results in a $1,000 overpayment. The IRS then refunds this overpayment directly into the child’s Trump account as the contribution from the pilot program.

The proposed regulations also clarify that a pilot program election itself is not considered a claim for a refund, which would subject it to a different set of rules. Instead, the election creates a deemed tax payment that results in an overpayment.

The reasoning seems to be that the refund system is an existing administrative framework rather than requiring the IRS to create a new process.

What’s A Special Taxable Year?

To make this all work, the proposed regulations introduce a concept called a special taxable year. This is a short, technical tax period created solely to process the pilot election.

The period starts once the election is processed and ends immediately afterward. This allows the IRS to determine that the $1,000 payment exceeds any tax owed, resulting in a $1,000 overpayment. By separating the election from the normal tax year, the IRS can process the election and deposit the contribution without waiting until year-end.

The proposed regulations also include a technical rule about interest. Normally, the IRS has to pay interest on tax overpayments that are not paid quickly. For these pilot program contributions, however, no interest on overpayments will be made before January 1, 2028.

If I Owe Money, Will My Child Get The Full $1,000 Contribution?

Normally, tax refunds can be reduced to satisfy certain debts, such as unpaid child support or federal debts like student loans. The rules specifically prevents that from happening with the pilot contribution.

The proposed regulations confirm that the $1,000 contribution cannot be reduced to cover federal tax liabilities, past-due support obligations, or other types of debt that typically trigger refund offsets. The rules also prevent the IRS from applying the overpayment to other federal tax liabilities before the contribution is deposited.

This means the entire $1,000 amount must be deposited into the child’s Trump account.

What About Deadlines?

Timing matters. The $1,000 contribution can only be deposited into an existing Trump account. If an election for the pilot program is made, but the child does not have a Trump account when the IRS processes that election, the payment can’t be delivered. If no account exists, there is simply nowhere for the payment to go.

The proposed regulations permit pilot program elections to be made as soon as a child becomes eligible, typically at birth and after the child is issued a Social Security number. Technically, the election can be made starting on the first day the child meets the definition of an eligible child under the statute. However, the election window does not stay open forever. The last day to make a pilot program election is December 31 of the year the child turns 17.

That deadline won’t be extended. According to the proposed regulations, taxpayers generally cannot depend on the IRS’s standard relief procedures to fix a late election.

Why Did The IRS Reject Automatic Enrollment?

During the regulatory comment period, some commenters recommended that the government should automatically open accounts for eligible children using information from tax returns or Social Security records.

The Treasury Department and the IRS chose not to adopt that approach because automatically opening accounts would require the government to disclose taxpayer information to financial institutions, which generally isn’t permitted. Without a statutory exception, the IRS determined that automatic enrollment would be hard to manage. Instead, they implemented an opt-in system that depends on elections filed by authorized individuals.

These proposed regulations focus primarily on the program's early mechanics—how accounts are opened and how the pilot contribution will be delivered. But holes still remain, including how the accounts might operate in future years. Additional guidance is expected before the program becomes fully operational.

© Forbes