On August 21, the Treasury Department issued a Notice of Proposed Rulemaking (NPRM)—RIN 1545-BS 14—that proposes rules to govern eligible investments of Trump Account funds. In its NPRM Treasury said only investments that comply with the rules in the regulation (when it is finalized) will be allowed to accept Trump Account funds. “The proposed regulations would provide guidance regarding eligible investments, which are the only assets in which Trump Account funds may be invested before the first day of the calendar year in which the account beneficiary attains age 18,” Treasury said. This proposed regulation builds on Notice 2025-68, on which comments were received and from which modifications were made.
Per the proposed regulations, eligible investments must be either a mutual fund or an exchange traded fund (ETF). The proposed regulation defines both terms. An ETF would be a domestic corporation registered under the Investment Company Act of 1940. A mutual fund would be a domestic corporation registered under the Investment Company Act as an open-end company that is not an ETF. The definitions also amplify the requirement that an eligible investment track the returns of a qualified index. The clarification states that a mutual fund or ETF “tracks the returns of an index if its investment objective is to provide investment results that, before fees and expenses, replicate the performance of the index, and the fund holds investments that are reasonably expected to accomplish that objective.”
The proposed regulations also explicitly state that an investment fund that is actively managed is not an eligible investment. They also state that a fund of funds (i.e., one that replicates the returns of multiple indices) is not an eligible investment unless it tracks only a single index and meets all of the other requirements of an eligible investment. An eligible investment may not use leverage “if the fund uses borrowings, derivatives, or other strategies that are economically equivalent to borrowings in a way that materially increases the risk of loss associated with an investment in the investment fund.”
Other elements of this guidance include a definition of qualified index (e.g., S&P’s stock market index), and a discussion of what constitutes permissible fees and expenses (which are limited to no more than 0.1 percent of the investment’s net assets) in eligible Trump Account investments).
The proposed regulations also specify that investments funds that track ESG (environmental, social and governance) indices are not eligible Trump Account investments.
Prospects: The proposed regulations are subject to a 60-day comment period starting August 21.
NAIFA Staff Contacts: Mike Hedge – Senior Director – Government Relations, at mhedge@naifa.org; or Jayne Fitzgerald – Director – Government Relations, at jfitzgerald@naifa.org