The Department of the Treasury and the IRS have issued proposed regulations providing general requirements for Trump Accounts, certain definitions relating to Trump Accounts, election rules to open an initial Trump Account by an authorized individual for an eligible individual, and rules for who is the responsible party for the initial Trump Account once the account has been opened. These proposed regulations provide useful information for parents and guardians who may want to elect to open an initial Trump Account, and for prospective trustees of Trump Accounts.
The proposed regulations request comments on all aspects of these proposed regulations.
Opening initial Trump Accounts
The proposed regulations provide that the election to open an initial Trump Account must be made by an authorized individual on Form 4547, Trump Account Election(s). An election to open an initial Trump Account must be made on or before Dec. 31 of the calendar year in which the eligible individual attains age 17. The election form also provides an opportunity for the authorized individual to request the $1,000 pilot program contribution from the Secretary for an eligible child.
If an election for the $1,000 pilot program contribution is being made at the same time as the election to open the initial Trump Account, the authorized individual is the individual able to make the election for a pilot program contribution.
If no election for a pilot program contribution is being made at the same time as the election to open an initial Trump Account, a different rule applies for determining who is an authorized individual. Under the proposed ordering rule for who may make the election, the authorized individual would be, in order of priority:
- a legal guardian,
- parent,
- adult sibling, then
- grandparent of the eligible individual.
Responsible party for the Trump Account
In general, the individual who makes the election to open an initial Trump Account for an eligible individual will be the responsible party of the initial Trump Account. The responsible party generally will have the authority, while the account beneficiary does not have legal capacity, to select among eligible investments (if more than one eligible investment is offered), request a qualified rollover contribution to a rollover Trump Account, request a transfer for a qualified ABLE rollover contribution, or select a successor responsible party for the account.
For more information about Trump Accounts, please contact our office.