The U.S. Department of the Treasury and the Internal Revenue Service on Aug 20 issued proposed regulations defining what investments a Trump Account (530A) may hold – the first formal rulebook on this question, replacing the interim framework that Notice 2025-68 has carried since late 2025. The rules cover the 0.1% fee cap, the definition of a qualifying index fund, when leverage disqualifies a fund, and a new explicit exclusion of ESG-index funds, per the notice of proposed rulemaking (docket CC-00349938-26, RIN 1545-BS14).
For a family whose child's account is already open, the day-to-day picture does not change: every account still starts in the State Street SPDR Portfolio S&P 500 ETF (SPYM) under the lineup Treasury named on July 1, and there is nothing to do in response to this filing. What is new is that the rules of the road are now on paper and open to public comment before they become final, per Treasury's release.
The 0.1% fee cap, and what it now covers
The statute already caps fund fees at 0.1 percent of net asset value. The proposed regulations resolve a question the earlier notice left open: whether sales loads and other transactional charges count toward that 0.1 percent. Under proposed §1.530A-3, they do. A fund cannot separate a sales load or a redemption fee from its expense ratio and stay eligible if the combined figure clears the cap.
Treasury explains the reasoning plainly in the preamble: "both fees and expenses reduce" the return to the account, so the limit "should apply to" any charge that "reduces the return" of the fund, per the proposed rulemaking. The threshold itself – 0.1 percent of the fund's net assets – is unchanged.
Leverage, redefined by risk
The earlier notice barred a fund whose borrowings or derivatives moved the fund's exposure past 100 percent of its net assets. Commenters pointed out that this form-based test could sweep in ordinary index funds that use small amounts of borrowing to handle redemptions or gain efficient exposure to an index component.
The proposed regulations replace that test with a risk-based one. A fund uses leverage – and is therefore ineligible – if it uses borrowings, derivatives, or economically equivalent strategies "in a way that materially increases the risk of loss associated with an investment in the investment fund," per the NPRM. The change is aimed at excluding leveraged funds "that are less suitable for many Trump account beneficiaries" without disqualifying the transactions that regular index funds routinely use.
ESG-index funds explicitly excluded
Notice 2025-68 hinted at an ESG carveout by describing environmental, social, and governance funds as sector-like. The proposed regulations drop the sector framing and just say so directly: under the "additional criteria" authority in section 530A(b)(3)(A)(iv), "any investment fund that tracks the returns of an ESG index is not an eligible investment," per the NPRM. The definition covers any index "that has, or is marketed as having, a focus on environmental, social, or governance factors."
Two other clarifications with real consequences
ETF share classes of mutual funds are in. The proposed regulations follow a stakeholder recommendation and confirm that ETF share classes of mutual funds count as ETFs for eligibility. That widens the field of funds a trustee may add to the menu in future.
Fund-of-funds are in only if they track a single qualified index. Section 530A(b)(3)(A)(i) requires an eligible investment to track "a qualified index" – singular. A fund of funds that replicates multiple indices does not qualify. One that tracks a single qualified index and meets the other requirements does.
What the growth period means, and does not
The proposed regulations define the "growth period" as the span that begins when a child's initial Trump Account is established and ends on December 31 of the year the child turns 17. The eligible-investment restrictions apply during that window. After it, the special rules fall away and the account is subject to the traditional-IRA framework of section 408 – see our earlier reporting on what happens to a Trump Account when your child turns 18.
When comments are due, and what happens next
The IRS release states that "additional comments from interested parties" are due by October 20, 2026 – 60 days after the NPRM's scheduled Federal Register publication on August 21, per Treasury and the IRS. Public-hearing requests must be submitted the same way. Treasury and the IRS intend these rules to apply to tax years beginning on or after January 1, 2026, once finalized.
This is the second Treasury-IRS proposed rulemaking on Trump Accounts in nine days: on Aug 11 the agencies published proposed rules for employer contribution programs under section 128, on a separate comment schedule. The two together fill in the operational framework families and employers had been reading through the Notice.
The five-fund menu Treasury named on July 1 continues to be the practical answer for most parents – see our earlier coverage of the investment lineup for what is available today. And for whether new employer, state, or nonprofit programs may add to your child's account, our Match & Bonus Finder is at trumpaccounts.com/finder.