Fiduciary Rules for ‘Trump Accounts’ Still Unsolved

When investment accounts for newborns, now known as “Trump Accounts” after President Donald Trump, was introduced earlier this year as part of the One Big Beautiful Bill Act, the goal was to use the funds to support key early adulthood milestones, such as pursuing education, starting a business or buying a home.

A pilot program provides $1,000 to U.S. citizens who have a Social Security number and were born between January 1, 2025, and December 31, 2028.

Since account holders cannot spend the money before their 18th birthday, the long-term financial planning involved is reminiscent of retirement accounts.

“America’s babies just became retirement investors,” says KC Boas, who leads the Retirement Savings Initiative at the Aspen Institute’s Financial Security Program.

‘Baby’ IRAs

Trump Accounts most closely resemble a traditional individual retirement account, due to key changes to the program made by the Senate, but they lack the benefit of tax-deductible contributions.

The accounts’ investments are limited to mutual funds or exchange-traded funds that track a qualified index, avoid leverage and have annual fees and expenses capped at 0.1% of the investment balance, among other criteria.

As these accounts are classified as IRAs, rollovers and employer contributions are allowed. There is an annual contribution limit of $5,000. What remains unknown is how the accounts will be administered. By law, the Department of the Treasury should make them operational by January 1, 2026, with initial deposits scheduled for July. Yet details on enrollment and operations remain unclear.

“It’s surreal how little is known about the capacity and who exactly is going to do what,” says Monique Morrissey, a senior economist at the Economic Policy Institute.

Who’s the Fiduciary?

Taking a lesson from other retirement accounts, such as 401(k)s, the accounts would benefit from automatic enrollment features, Boas says.

But it is currently uncertain whether these will be classified as employer benefits under the Employee Retirement Income Security Act and whether employers will serve as fiduciaries or merely as plan administrators and advisers. It is also unclear whether the plans will be administered by IRA providers or the Treasury.

“There isn’t necessarily a fiduciary for the accounts. The Treasury has to select trustees, and there are statutory restrictions on the investment types and fees,” says Michael Kreps, who chairs Groom Law Group’s retirement services group. “But the statute doesn’t impose fiduciary duties on anyone specifically. That said, a lot of the design and the fees account owners pay will depend on how the Treasury decides to set up the accounts.”

While most logistics are not yet figured out, the accounts have potential to create more market participation than ever before, says Finseca CEO Marc Cadin.

“Everybody in America that’s born after January 1, 2026, is going to participate in the market,” Cadin says. “I don’t think we’ve ever had that—where literally every person born is automatically a market participant.”

The potential benefit, especially if the accounts are used as an IRA, is significant, he says. Left untouched, a $1,000 seed invested in the S&P 500 Index could grow to nearly $500,000 by age 65, Cadin says. Add modest contributions from family or employers, and the account could exceed $1.7 million, he adds.

How Are the Accounts Best Used?

Trump Accounts also raise practical questions for families weighing college, retirement and other financial goals. Though they eventually function as IRAs, the potential to use the accounts’ savings for educational expenses resembles 529 savings accounts. But a 529 savings account has tax-advantaged contributions and allows rollovers into IRAs of up to $35,000, if the child ends up not going to college.

Because 529 accounts offer significant tax advantages, experts suggest they are better for college savings than Trump Accounts. However, Trump Accounts automatically convert to IRAs and can be used for various expenses, so they may be a more suitable option for some individuals.

Though families will use the accounts differently, White House officials have touted the accounts’ ability to compound interest, a key element of investing and retirement saving. The Council of Economic Advisers, for one, released an analysis in August detailing how much the accounts could grow based on contributions and the average return of U.S. stock indexes.

The Treasury needs to address numerous questions before launching the accounts. However, Cadin suggests saving for retirement—much like the retirement accounts these will eventually transform into—seems the most prudent approach for account holders—and their guardians—to take.

“It has real potential, but only if we can keep it locked up and make it savings—not make it a future source of spending,” he says.