Guidance Issued for Child IRA Accounts
Published 2026-07-02
GiftLaw Note: The Treasury Department and IRS recently issued guidance regarding the new child IRA accounts, also known as "Trump Accounts." In Revenue Procedure 2026-25, the IRS created a gift tax reporting safe harbor that eliminates a significant administrative concern that had emerged surrounding contributions to these accounts.
Qualifying contributions by individuals to these accounts will not require the filing of a federal gift tax return, provided certain conditions are satisfied. This guidance is intended to reduce the compliance burden on parents, grandparents and other family members who wish to contribute to a child's account.
“By granting this relief, the IRS has responded to concerns raised by taxpayers who planned to make contributions to a Trump account but worried such donations would trigger the gift tax reporting rules. The relief granted will reduce the potential burden placed on friends and family who want to put money into a Trump account,” said IRS Chief Executive Officer Frank J. Bisignano. “
The uncertainty arose because contributions to Trump Accounts could potentially have been characterized as gifts of future interests, which generally do not qualify for the annual gift tax exclusion and therefore may require gift tax reporting even though no gift tax is ultimately due. Under the new safe harbor, however, the IRS will treat qualifying contributions as completed gifts, not gifts of future interests, that are eligible for the annual gift tax exclusion. The annual gift tax exclusion amount in 2026 is $19,000, indexed for inflation.
The safe harbor applies only to individual donors and only if the donor's taxable gifts during the calendar year consist exclusively of cash contributions to one or more Trump Accounts. Contributions must be made in cash, including by check, money order, or electronic funds transfer and must be completed before the beneficiary reaches age 18.
As a reminder, Trump Accounts generally may receive contributions from parents, grandparents, other individuals, employers, charities and governmental entities, subject to an annual contribution limit of $5,000 per beneficiary, indexed for inflation beginning after 2027. The federal government will also make a one-time $1,000 contribution for eligible children born between January 1, 2025 and December 31, 2028, if a timely election is made.
Rev. Proc. 2026-25; 2026-29 IRB 1
Transfer Tax Safe Harbor for Certain Contributions to Trump Accounts
Part III
Administrative, Procedural, and Miscellaneous
26 CFR 601.601: Rules and regulations.
(Also Part I, Sections 530A, 2010, 2503, 2505, 2642, 2662, 6019.)
SECTION 1. PURPOSE
This revenue procedure provides a transfer tax safe harbor for certain individual donors who make one or more contributions to Trump accounts established under section 530A of the Internal Revenue Code (Code).1 In the interest of sound tax administration, for taxpayers within the scope of section 4 of this revenue procedure, contributions to Trump accounts will be treated as completed gifts that are not gifts of future interests in property and to which the annual per-donee gift tax exclusion applies. As a result, taxpayers within the scope of section 4 of this revenue procedure will not be required to file gift tax returns reporting such contributions.
SECTION 2. BACKGROUND
01. Trump accounts.
Section 70204 of Public Law 119-21, 139 Stat. 72 (July 4, 2025), commonly known as the One, Big, Beautiful Bill Act, added section 530A and related provisions concerning Trump accounts to the Code. A Trump account is a type of traditional individual retirement account (IRA) that is established under section 530A for the exclusive benefit of an eligible individual or the eligible individual's beneficiaries and is designated as a Trump account at its establishment. An eligible individual is any individual (i) who has not attained age 18 before the close of the calendar year in which an election to open an initial Trump account (initial Trump account election) is made, (ii) for whom a social security number has been issued before the date of the initial Trump account election, and (iii) for whom the initial Trump account election is made. The eligible individual is the owner of the Trump account and is referred to as the account beneficiary.
A Trump account is subject to certain special rules that do not apply to other individual retirement arrangements under section 408, most of which apply only during the period ending before January 1 of the calendar year in which the account beneficiary attains age 18. This period is referred to as the growth period. The special rules that apply only during the growth period include a restriction on distributions to the account beneficiary. Specifically, during the growth period, no distributions may be made from a Trump account, except for qualified rollover contributions, a qualified ABLE rollover contribution (made only during the calendar year in which an account beneficiary attains age 17), distributions of excess contributions, and distributions upon the death of the account beneficiary. Consequently, the account beneficiary of a Trump account generally does not have access to amounts in the Trump account during the growth period.
Trump accounts may receive contributions from nonprofits, governments, employers, and individuals. During the growth period, a Trump account is subject to an annual contribution limit of $5,000, adjusted for inflation after 2027. This annual limit does not apply to the $1,000 Trump account pilot program contribution, qualified general contributions (which are funded by nonprofits and certain governmental entities), or qualified rollover contributions, but does apply to any other contribution (including contributions from employers).
As of June 4, 2026, nearly six million elections to open a Trump account have been received.
.02 Relevant transfer tax rules.
Individuals and their estates generally are subject to gift, estate, or generation-skipping transfer (GST) tax liability once the value of cumulative transfers during life and at death exceed the lifetime basic exclusion amount, which is currently $15 million (adjusted annually for inflation). Sections 2010(c), 2505(a), 2631(c).2
The gift tax applies to a transfer of property by way of gift, whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is real or personal, tangible or intangible. Section 2511(a). The term “taxable gifts” is defined as the total amount of gifts made during the calendar year, less any available deductions (e.g., gift tax marital or charitable deductions). Section 2503(a). However, there is an annual per-donee gift tax exclusion from the total amount of the donor's gifts during a calendar year. Specifically, each donor may exclude from the amount of the donor's gifts those made to a particular recipient to the extent the total value of the donor's gifts to that recipient does not exceed this annual exclusion amount, provided that those gifts are not gifts of a future interest in property. Section 2503(b)(1). For calendar year 2026, the annual exclusion amount (as indexed for inflation) is $19,000 per individual recipient, and is available in addition to the donor's lifetime basic exclusion amount (the cumulative amount excluded from gift and estate taxes).
A taxable gift or transfer at death also may be subject to GST tax. Section 2601. Every individual is allowed a lifetime GST exemption amount, which is equal to the basic exclusion amount for gift and estate tax purposes (thus, $15,000,000 for calendar year 2026). Section 2631(c).
Gifts are also subject to certain reporting requirements. An individual making one or more gifts generally is required by section 6019 (and by section 2662 if the gift also is a direct skip for GST tax purposes) to file a gift tax return to report gifts made during the calendar year. The gift tax return must be filed on or before the date specified in section 6075(b), generally April 15 of the following calendar year. If the donor's total gifts to each recipient (other than gifts of future interests in property) during the calendar year are valued at or below the annual per-donee gift tax exclusion amount, those gifts do not require the filing of a gift tax return. However, gifts of future interests in property are required to be reported on a gift tax return because they are not eligible for the annual per-donee gift tax exclusion. In FY 2025, the Internal Revenue Service (IRS) received approximately 300,000 gift tax returns (Form 709).3
SECTION 3. DISCUSSION
The Department of the Treasury (Treasury Department) and the IRS have received stakeholder comments and are aware of public commentary raising questions about the transfer tax consequences for individual donors who make contributions to Trump accounts, including whether such contributions constitute taxable gifts that must be reported on a gift tax return. Such reporting would be required if contributions to Trump accounts are treated as gifts of future interests.
The Treasury Department and the IRS understand the concerns raised in public comments and recognize that the vast majority of individual donors to Trump accounts are unlikely to ever owe federal gift, estate or GST tax due to the lifetime basic exclusion amount of $15,000,000 and the corresponding $15,000,000 GST exemption amount. For many of these donors, the cost and other burdens of complying with gift tax reporting requirements could outweigh the anticipated financial savings benefit of making one or more contributions to a Trump account. In addition, gift tax reporting compliance by these donors could dramatically increase the burden on the IRS to process gift tax returns for individual donors who are unlikely to ever be subject to gift, estate, or GST tax. Given the fact that nearly 6,000,000 elections to open Trump accounts have already been received, the number of gift tax returns filed annually could be expected to increase from roughly 300,000 to several million. Accordingly, the Treasury Department and the IRS are providing a safe harbor, described in section 5 of this revenue procedure, for taxpayers within the scope of section 4 of this revenue procedure.
SECTION 4. SCOPE
.01 In general. The safe harbor described in section 5 of this revenue procedure applies for a particular calendar year only if all of the requirements of section 4.02 of this revenue procedure are met.
.02 Requirements.
(1) Taxpayer is an individual;
(2) The only taxable gifts made by the taxpayer during the calendar year are cash contributions (in the form of cash, check, money order, or electronic funds transfer) to one or more Trump accounts, each made before the calendar year in which the account beneficiary attains age 18;
(3) The taxpayer's total gifts during the calendar year to each individual who is an account beneficiary, including contributions to that account beneficiary's Trump account, do not exceed the annual exclusion amount under section 2503(b) ($19,000 for 2026);
(4) Such contributions to Trump accounts made during the calendar year do not generate for that calendar year either a gift or GST tax liability, after application of the taxpayer's remaining applicable credit amount4 against the gift tax, or remaining GST exemption; and
(5) Disregarding the Trump account contributions described in section 4.02(2) of this revenue procedure, no gift tax return is required to be filed, and no gift tax return is otherwise filed, for that calendar year by or on behalf of the taxpayer, whether for GST tax, portability, or other purposes.5
SECTION 5. SAFE HARBOR
If each of the requirements specified in section 4.02 of this revenue procedure is met for a calendar year in which a taxpayer makes contributions to one or more Trump accounts, each Trump account contribution made by the taxpayer during that calendar year will be treated as a completed gift to the account beneficiary that is not a future interest in property and to which the annual exclusion applies for purposes of gift tax, GST tax and gift tax reporting. As a result, taxpayers within the scope of section 4 of this revenue procedure will not be required to file a gift tax return reporting such contributions.
SECTION 6. EXAMPLE
In calendar year 2026 individual donor (Taxpayer) contributes $5,000 cash to each of three Trump accounts established for account beneficiaries A, B, and C, and makes an additional gift to C of $13,000 cash. Taxpayer makes no other gifts during the calendar year and is not required to, and does not, file a gift tax return for the calendar year for any other purpose. The $15,000 in contributions to Trump accounts do not generate a gift or GST tax liability, after taking into consideration the Taxpayer's remaining lifetime applicable exclusion amount or remaining GST exemption. Under these facts, the requirements of section 4.02 of this revenue procedure are met and Taxpayer's 2026 Trump account contributions will be treated as completed gifts to A, B, and C that are not future interests in property. If instead Taxpayer's cash gift to C in 2026 is $14,500, the requirement in section 4.02(3) of this revenue procedure is not met because Taxpayer's total gifts to C during calendar year 2026 exceed the annual per-donee gift tax exclusion under section 2503(b) of $19,000. Accordingly, Taxpayer must file a gift tax return for calendar year 2026 reporting all 2026 gifts, and must report the Trump account contributions to A, B, and C as gifts of future interests.
SECTION 7. PAPERWORK REDUCTION ACT
The Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) (PRA) generally requires that a Federal agency obtain the approval of the Office of Management and Budget (OMB) before collecting information from the public, whether such collection of information is mandatory, voluntary, or required to obtain or retain a benefit. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the OMB.
Section 4 of this revenue procedure sets forth safe harbor requirements that taxpayers may follow for Trump account contributions to be treated as gifts to which the gift tax annual exclusion under IRC section 2503(b) applies for purposes of gift tax, GST tax, and gift tax reporting. Taxpayers should maintain records sufficient to substantiate compliance with the safe harbor rules. These recordkeeping requirements are considered general tax records under §1.6001-1(e). For PRA purposes, general tax records are already approved by OMB under 1545-0074 for individual filers. The revenue procedure does not impose any additional burden for taxpayers for purposes of PRA.
SECTION 8. DRAFTING INFORMATION
The principal author of this revenue procedure is Rachel K. Downs of the Office of Associate Chief Counsel (Passthroughs, Trusts, and Estates). For further information regarding this revenue procedure, please contact Rachel K. Downs at (202) 317-6859 (not a toll-free call).
FOOTNOTES
1. Unless otherwise specified, all “section” references are to sections of the Code.
2. In general terms, if a portability election under section 2010(c)(5) is made by the estate of a predeceasing spouse, the predeceasing spouse's unused exclusion amount (deceased spousal unused exclusion or DSUE) is added to the surviving spouse's basic exclusion amount to increase the value of the surviving spouse's cumulative transfers exempt from gift and estate tax. The sum of the basic exclusion amount and any available DSUE amount is the applicable exclusion amount. Section 2010(c)(3).
3. 2025-I.R.S. Data Book at 4 tbl. 1-2 (2026). See IRS Data Book, Table 1-2, available here: Returns filed, taxes collected and refunds issued | Internal Revenue Service.
4. The applicable credit amount effectively exempts from federal estate and gift tax an individual's taxable transfers with a cumulative value not exceeding the applicable exclusion amount. See section 2010(c).
5. For example, a gift tax return may be required to make affirmative allocations of GST exemption, such as a late allocation of GST exemption to a prior transfer or an allocation at the close of an estate tax inclusion period (as defined in section 2642(f)(3)), or to make certain GST elections. In addition, a gift tax return may be required as the result of an examination of the estate tax return.
