Retirement Industry Presses Treasury on Trump Account Rollovers and Providers

The comment period on IRS Notice 2025-68, the initial guidance on Trump Accounts, closed February 20, 2026, and the retirement industry used the moment to press Treasury on questions that will decide where families actually keep a child's account. In a letter filed that day, the SPARK Institute, whose member firms administer retirement plans for more than 110 million American workers, laid out a detailed set of requests on rollovers, fees and a gift-tax wrinkle that had gone largely unnoticed. The Investment Company Institute and other trade groups filed similar letters the same week.

The rollover bottleneck

Under the Act, a Trump account must be opened directly with Treasury and funded first with the $1,000 federal pilot contribution before any other money comes in. Treasury has engaged a private provider to administer these default accounts, but the Act also allows a parent to instead use a private IRA provider through what the notice calls a "rollover Trump account," which must be funded first by a full transfer of the balance from the Treasury-held account. SPARK told Treasury the industry is "awaiting guidance on how these rollover Trump accounts will work," listing open questions including whether a rollover account can be opened before the default account has any contributions, whether providers need an approval process, and how funds actually move from Treasury to a private custodian. The Investment Company Institute went further, according to InvestmentNews, urging Treasury to open the program to a broad range of IRA providers and non-bank trustees rather than a single government-selected custodian, arguing that "a competitive marketplace is key to the long-term success of the program." PLANADVISER reported that ICI also wants safeguards against the Treasury-selected default provider gaining an unfair advantage once portability begins.

Fees, advice and a rollover technicality

The law caps the only investment allowed during a child's growth period, a U.S. equity index fund or ETF, at 0.1% in annual fees and expenses. SPARK pointed out that 10 basis points on a starter account cannot cover recordkeeping, a call center, statements, and new tracking work the law requires, such as reporting rollover contributions within 30 days and policing the $5,000 annual limit, and asked Treasury to confirm that a separate account-based administrative fee is not prohibited. It also asked Treasury to confirm that a financial adviser's fee can be paid out of a Trump account without counting as a taxable distribution, the same treatment the IRS has long applied to fees paid from a traditional IRA. Separately, SPARK flagged what it called an error in a footnote to Notice 2025-68, which reads as barring any rollover to an employer 401(k), 403(b) or governmental 457(b) plan once a Trump account holds any after-tax contributions from a parent. SPARK argued the Tax Code allows the pre-tax portion of such an account to roll into a plan regardless, and asked Treasury to correct the footnote before it becomes the default assumption among providers and advisers.

The after-tax math on a gift-tax gap

SPARK's letter raised a second, easily missed issue: whether a parent's or grandparent's contribution counts as a gift of a "present interest," eligible for the annual gift-tax exclusion, or a gift of a "future interest," which is not, because the child cannot access the money until the year before turning 18.

Example, with round numbers: a grandparent contributes $5,000 a year to a grandchild's Trump account for ten years, $50,000 in total. If Treasury confirms the contribution is treated like a gift to a 529 plan, a completed present-interest gift, each $5,000 gift is fully absorbed by the $19,000 annual exclusion for 2026, no Form 709 is required, and none of it touches the $15 million lifetime gift and estate tax exemption available in 2026. If instead the contribution is treated as a future interest, every $5,000 gift falls outside the annual exclusion entirely, requires a Form 709 filing in every year it is made, and reduces the $15 million lifetime exemption dollar for dollar, even though the family never comes close to using it. Over ten years that is a $50,000 dent in the lifetime exemption and ten separate gift-tax returns, purely because of how one footnote gets resolved.

What to watch

SPARK said it expects the first round of proposed regulations "very soon," with a further round targeted for the end of the first quarter of 2026 to address employer contributions and payroll-based Trump account programs, including whether the $2,500 annual employer contribution counts as wages for FICA purposes. Treasury has signaled that full portability to private-sector platforms is a second-phase issue, with initial efforts focused on getting the default accounts launched ahead of the program's statutory start. Families deciding whether to open a rollover account right away or wait for a Treasury-selected provider are, for now, choosing between an untested rollover process and a program still being built.

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