Written By Jenny Kiffmeyer, J.D – The Retirement Learning Center
“A client is considering opening a Trump account for his son but was told that the account would reduce his son’s eligibility for financial aid in the future. Is this accurate?”
Highlights of the discussion
Currently, the answer is not entirely clear. No direct guidance has been issued yet specifically addressing Trump Accounts. Current Free Application for Federal Student Aid (FAFSA) instructions, however, exclude retirement plans, including noneducation IRAs, from reportable investments.
Because a Trump Account is a traditional IRA under IRC §408(a), current FAFSA instructions would appear to support treating it in the same manner as other noneducation IRAs and excluding its value from reportable investments. However, Federal Student Aid has not yet specifically confirmed the treatment of Trump Accounts.
As background, Section 70204 of the One Big Beautiful Bill Act added IRC §530A, which provides for the creation of Trump Accounts for children who are under the age of 18. Trump Accounts are tax-advantaged savings accounts designed to help families build long-term financial resources for minors.
A Trump Account is a type of traditional individual retirement account (IRA). The owner of the account is the minor, and it is subject to certain special rules that do not apply to traditional IRAs – most of which only apply during the period that ends before January 1 of the calendar year in which the account owner and beneficiary attains age 18 (i.e., the “growth period”). These special rules include:
- Funds in a Trump Account can be invested only in eligible investments;
- A Trump Account has a separate contribution limit from other IRAs;
- A Trump Account is generally not allowed to make distributions;
- No deduction by an individual is allowed under IRC §219 for any contribution to a Trump Account; and
- Trustees of Trump Accounts have similar but different reporting requirements from trustees/custodians of other IRAs.
After the growth period, most of these special rules cease to apply, and the rules under IRC §408 governing traditional IRAs generally apply. For more specifics on Trump Account requirements, see: Notice 2025-68 and subsequent Treasury and IRS guidance under IRC §530A.
Conclusion
Additional guidance from Federal Student Aid would is needed to confirm the treatment of Trump Accounts on the FAFSA. We will update this Case of the Week as soon as additional guidance is available.
