Trump Accounts Update: New IRS Guidance, Robinhood Rollout & Gift Tax Rules
Introduction
Hello and welcome to Traction with the Tiger. I am your host and Tax Tiger, Chris Whittack. I focus on moving myself, my clients, my firm, and the profession forward.
Today I’m talking about Trump accounts. We have some update to some guidance. We have a little more information about sort of how the accounts are going to be set up. And it’s very timely because these accounts are gonna start to be opened and they’re going to start to be funded on July 6th, 2026. That’s sort of the first day that you can really have one open, so it’s a good time to check back in on the Trump accounts.
Recap: How Trump Accounts Work
Contribution Limits and Eligibility
So if you recall, these Trump accounts are kind of similar to a 529 plan. They’re a little bit similar to an IRA, but there’s a lot of unique provisions to them.
We’re talking about how you can contribute up to $5,000 a year into these plans. It is for children under the age of 18, they need to have a valid Social Security number, and it is set aside in a very irrevocable way where nobody can access this money until the child is in the year they turn 18.
Access Restrictions
I’ve got a four-year-old at home and an almost two-year-old at home. If I choose to put money into their accounts, I can’t touch it. If I die, my spouse can’t touch it, the kids can’t touch it, the grandparents can’t touch it. Nobody can touch this money until the year my oldest turns 18. Then it becomes her account and it becomes basically a traditional IRA that she has. If there is $50,000 or $100,000 in it at that point, it becomes 100% her money. But if she’s 16 years old and wants to buy a car, she cannot use the Trump money. I can’t use the Trump money either to help her buy that car. It is truly locked away until the year they turn 18.
Roth Conversion Planning Opportunity
After that time period, the rules are like a traditional IRA essentially. I think the strategy, if you’re going to do a Trump account, is that you want to be looking at whether your 18-year-old should be doing a Roth IRA conversion. If now I’ve got this traditional IRA with money in it, and my kid is 18 and they’re finishing high school or starting college, their income is probably not real high. If I’ve got $50,000 in it, can I convert that and pay—or have the child pay—a very small amount of tax? That seems like a key strategy to consider.
You need to understand what the tax rules are the year the kid turns 18.Is there kitty tax implications? Is the state tax going to be similar to the federal tax? What is the standard deduction going to be?
I have no idea. My kid is four years old. What are the tax laws going to be 14 years from now? I have no idea. But it’s in the back of my mind that this could be a legitimate strategy.
Investment Restrictions
There are a lot of restrictions, and we’ve talked about some of these in the past. It really has to be invested in the U.S.-based stock market.
Robinhood Becomes the Initial Custodian
Opening an Account
One of the questions that was pending was where you’re going to be able to set up these accounts. Initially, these accounts are going to be opened through Robinhood. You can see what Robinhood is in it for. They’re in it to facilitate having a bunch of young customers. It does appear that you’re going to be able to transfer these over and open a Schwab, Fidelity, or Vanguard account if that’s where you keep your other accounts. That piece is still unknown. How are you going to be able to transfer this? If it’s like an IRA, is it really just a rollover?
Making the Election
You don’t just show up at Robinhood to sign them up. You have to make an election. You have to fill out Form 4547.You can do it inside a 2025 tax return. In reality, I’ve not had a single client do that, and I don’t recommend anyone do that. You can also go online to trumpaccounts.gov and set up an online portal and fill out that election. I have not had clients do that yet either.
Why Waiting May Be the Best Approach
Really, the first date these can be opened is July 6th.
My advice to people has been—and will continue to be—why don’t you let other people go first? If you want to have one of these accounts, that’s great. Let’s get one set up before the end of the year. Mid-December is our deadline. Our deadline is not July 6th, July 7th, or July 8th. There’s going to be some problems when millions of people sign up. I’m going to let other people discover what they are.
I’m going to let the Trump account website get fixed. I’m going to let Robinhood fix their process. And I’m going to wait for more guidance on transfers.
New IRS Gift Tax Guidance
Revenue Procedure 2026-25
The second piece of news came out on June 29, 2026. It’s Revenue Procedure 2026-25. It’s dealing with an issue around gift tax filings.
The Original Problem
When you contribute money into a Trump account, do you need to file a gift tax return? Section 529 has a special provision that says when you contribute money to a 529 plan, it qualifies as a present interest. If it’s less than the annual exclusion amount, you do not need to file gift tax returns. Section 530A, which covers Trump accounts, did not contain that provision.
Even a $1 contribution would technically trigger a gift tax filing.
The IRS Safe Harbor
Prior to June 29th, the IRS was saying Congress wrote the law and only Congress could fix the problem. Then the IRS issued Revenue Procedure 2026-25. It’s not clear to me the IRS has the authority to do what they did, but it is taxpayer friendly. They created a safe harbor. If you meet the requirements, you do not need to file a gift tax return.
Who Qualifies?
If all of your gifts during the year are cash gifts—including Trump account contributions—and none exceed the annual exclusion amount, then you do not need to file a gift tax return. If you are making taxable gifts for other reasons or making non-cash gifts, then your Trump account contributions become taxable gifts and need to be included on your gift tax return.
Looking Ahead
I would still like to see the language in the law changed. Congress needs to act. Every time Congress passes a tax bill, they typically include technical corrections. This seems like an obvious technical correction.
Section 529 plans have the language. Trump accounts need that same sentence. That would solve the entire gift tax problem and make Revenue Procedure 2026-25 unnecessary.
Closing Thoughts
For now, this is welcome news. The other major development is Robinhood becoming the initial custodian. July 6th is here, these accounts are beginning to open, and we’ll continue watching for additional guidance. If we get more information, we’ll check back in on another episode. I hope you enjoyed today’s episode. If you found it interesting and useful, please share it with a friend and subscribe for more Traction with the Tiger content.
Thanks everybody.