Trump Accounts Available Starting July 4th
Effective July 4, 2026, families may begin opening Trump Accounts, a new type of child-focused, IRA-style savings account established under IRC Section 530A. These accounts are designed to encourage long-term savings by allowing investment earnings to grow on a tax-deferred basis during the child’s early years. In general, a Trump Account may be opened for a U.S. citizen child who is under age 18 at the end of the year and has a valid Social Security number. An authorized individual, such as a parent or legal guardian, may establish the account by filing IRS Form 4547 or through the IRS’s online Trump Account portal.
Trump Accounts have an annual contribution limit of $5,000 per child and are intended to provide a simple, low-cost investment vehicle. Investments are limited to mutual funds or ETFs that track the S&P 500 or another qualifying equity index, with at least 90% of assets invested in U.S. companies. The rules prohibit the use of leverage and require investment options to have expense ratios of no more than 0.10%, helping keep costs low while promoting long-term market participation.
Funds generally cannot be withdrawn before the beneficiary reaches age 18. At that point, the account holder may withdraw the funds (subject to traditional IRA taxation rules), continue investing through the Trump Account, or convert the account to a Roth IRA. A Roth conversion may provide future tax-free growth, although the converted amount is generally taxable in the year of the conversion. As with any retirement planning strategy, taxpayers should evaluate these options based on their individual financial and tax circumstances.
In addition to family contributions, certain children may qualify for supplemental funding. Eligible children born between 2025 and 2028 may receive a $1,000 separate federal pilot contribution under IRC Section 6434, provided they meet the applicable statutory requirements. Separately, the Michael and Susan Dell Foundation has pledged a $250 contribution for qualifying children living in ZIP codes with a median household income of $150,000 or less. These supplemental contributions are subject to separate eligibility rules and do not affect the requirements for opening a Trump Account. Families interested in learning more or opening an account can visit the official program website at: https://bit.ly/49ZCz3C
IRS Provides Gift Tax Safe Harbor for Trump Account Contributions
The IRS and Treasury Department recently issued Revenue Procedure 2026-25, establishing a gift tax reporting safe harbor for certain contributions made to Trump Accounts created under IRC Section 530A. The guidance addresses concerns that contributions to these child-focused savings accounts could be treated as gifts of a future interest, which generally would not qualify for the annual gift tax exclusion and could require the donor to file a federal gift tax return.
Under the new safe harbor, qualifying contributions to a Trump Account will be treated as present-interest gifts that are eligible for the annual gift tax exclusion, which is $19,000 per recipient for 2026. As a result, many donors will be able to make contributions without triggering gift tax reporting requirements. It is important to note that the annual contribution limit to Trump Accounts is $5,000 per child per year, when taking the annual gift tax exclusion of $19,000 per recipient for 2026 into consideration.
To qualify for the safe harbor, the donor’s total gifts to the beneficiary for the year must not exceed the annual exclusion amount, the contribution must not result in any gift or generation-skipping transfer (GST) tax liability, and the donor must not otherwise be required to file a gift tax return for that year. When these conditions are satisfied, contributions to a Trump Account will not require federal gift tax reporting, simplifying the gifting process for parents, grandparents, and other individuals seeking to help fund a child’s long-term savings.
IRS Updates 2026 Form 1099-R to Reflect Trump Accounts and Other Reporting Changes
The IRS has released the 2026 Form 1099-R and accompanying instructions, introducing several updates that affect retirement distribution reporting. Among the most notable changes are new reporting fields for Trump Accounts, as well as an optional distribution code for qualified charitable distributions (QCDs). The revised form also includes several formatting changes intended to improve reporting consistency.
To accommodate the new Trump Accounts, the IRS has renumbered several existing boxes and added new reporting fields. A new checkbox identifies distributions from a Trump Account, while an additional box is used to report earnings attributable to excess contributions. During a beneficiary’s growth period, only limited distributions are permitted, such as distributions of excess contributions, distributions following the beneficiary’s death, and qualified ABLE rollover contributions. These transactions must be reported on Form 1099-R using the applicable distribution codes.
The revised form also introduces optional distribution code Y for qualified charitable distributions. When used, code Y must be reported in conjunction with the applicable underlying distribution code and cannot be used as a standalone code. In addition, the IRS has made several structural revisions to the form, including separate address fields for payers and recipients and updated numbering for several existing boxes
SEC Fines Merrill Lynch $7.5 Million Over Anti-Money Laundering Reporting Deficiencies
The U.S. Securities and Exchange Commission (SEC) has fined Bank of America’s Merrill Lynch $7.5 million to settle allegations that the firm failed to file numerous Suspicious Activity Reports (SARs) between April 2020 and September 2024. Without admitting or denying the SEC’s findings, Merrill agreed to the settlement and the associated civil penalty.
According to the SEC, the firm’s anti-money laundering monitoring system relied on automated risk scores to identify potentially suspicious transactions. Merrill generally investigated only those transactions that exceeded a predetermined risk threshold, despite internal analyses indicating that some lower-scoring transactions also warranted review and could have required SAR filings under the Bank Secrecy Act.
Following the SEC’s investigation, Merrill lowered its internal review threshold and filed additional SARs. The case serves as a reminder that financial institutions are expected to maintain effective anti-money laundering compliance programs and regularly evaluate automated monitoring systems to ensure potentially suspicious activity is appropriately identified, investigated, and reported.
