Key Takeaways
- • Industry firms and trade groups, including Vanguard and Coinbase, urged the Treasury Department and IRS to broaden the pool of eligible Trump Account investments to include bonds, global equities and cryptocurrency, according to public comments submitted before the Oct. 20 deadline.
- • Vanguard argued in its Oct. 20 comment letter that a more flexible definition of eligible investments would "encourage diversification and appropriate asset allocation," citing better risk-adjusted returns from globally diversified equity portfolios.
- • Coinbase urged regulators to permit investment in "widely traded digital assets" including Bitcoin and Ether, either directly or through pooled products, arguing the proposal excludes products permissible in traditional IRAs.
- • The proposed framework requires eligible indexes to have a public methodology, exclude industry-based ownership interests, and be primarily domestic, with a safe harbor of at least 90% U.S. companies by index weight.
- • Nearly 70 million Trump Accounts have been created, with the 2025 law's text requiring investment in low-cost index funds tracking primarily U.S. companies, which Cato Institute's Adam Michel reads as narrowly scoped.
Summary
Treasury and IRS are weighing industry comments urging an expansion of the investment options permitted in Trump Accounts, the tax-deferred savings vehicles for children that launched in July. The public comment period on the August investment framework closed Oct. 20, and regulators will now determine whether and how to widen the pool of eligible investments.
Vanguard, in its Oct. 20 comment letter signed by Ricardo R. Delfin, principal and global head of regulatory and public policy, asked Treasury to consider a more flexible definition of eligible investments that would permit other low-cost, broadly diversified options such as bonds and international equities. The firm argued that globally diversified equity portfolios may deliver better risk-adjusted returns over extended periods than portfolios concentrated in any single country, including the United States.
Coinbase advocated that final regulations preserve meaningful investment choice, stating that the proposed rules, by categorically excluding digital assets and blockchain technology, prevent beneficiaries from accessing products permissible in traditional IRAs. The company recommended allowing investment in widely traded digital assets meeting objective eligibility standards, including Bitcoin and Ether, directly or through professionally managed pooled products.
The push faces a congressional requirement, set in the 2025 law establishing Trump Accounts, that assets be invested in low-cost index funds tracking primarily U.S. companies. Adam N. Michel, director of tax policy studies at the libertarian Cato Institute, said congressional intent appears "pretty narrowly scoped," limited to broad index funds of U.S. equities with low fees. He added, however, that he would not be surprised if Treasury read the law liberally to add options, pointing to its July decision to accept individual stock donations to the accounts.
Currently, the default contribution option is the State Street SPDR Portfolio S&P 500 ETF (SPYM). In July, Treasury also selected four additional index ETFs: iShares Core S&P 500 ETF (IVV), Vanguard Total Stock Market ETF (VTI), State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM), and iShares Core S&P Total U.S. Stock Market ETF (ITOT). The August proposal also set restrictions on fees, foreign investments and ESG funds, and would require eligible indexes to be primarily domestic, excluding industry-based ownership interests and offering a public methodology.
Nearly 70 million accounts have been created, more than 60 million through automatic enrollment by Treasury. The government seeds accounts with $1,000 for children born from Jan. 1, 2025 through Dec. 31, 2028 under a pilot program, and annual contributions from parents, individuals and employers are capped at $5,000, with nonprofit donations exempt from the cap.
Vanguard, in its Oct. 20 comment letter signed by Ricardo R. Delfin, principal and global head of regulatory and public policy, asked Treasury to consider a more flexible definition of eligible investments that would permit other low-cost, broadly diversified options such as bonds and international equities. The firm argued that globally diversified equity portfolios may deliver better risk-adjusted returns over extended periods than portfolios concentrated in any single country, including the United States.
Coinbase advocated that final regulations preserve meaningful investment choice, stating that the proposed rules, by categorically excluding digital assets and blockchain technology, prevent beneficiaries from accessing products permissible in traditional IRAs. The company recommended allowing investment in widely traded digital assets meeting objective eligibility standards, including Bitcoin and Ether, directly or through professionally managed pooled products.
The push faces a congressional requirement, set in the 2025 law establishing Trump Accounts, that assets be invested in low-cost index funds tracking primarily U.S. companies. Adam N. Michel, director of tax policy studies at the libertarian Cato Institute, said congressional intent appears "pretty narrowly scoped," limited to broad index funds of U.S. equities with low fees. He added, however, that he would not be surprised if Treasury read the law liberally to add options, pointing to its July decision to accept individual stock donations to the accounts.
Currently, the default contribution option is the State Street SPDR Portfolio S&P 500 ETF (SPYM). In July, Treasury also selected four additional index ETFs: iShares Core S&P 500 ETF (IVV), Vanguard Total Stock Market ETF (VTI), State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM), and iShares Core S&P Total U.S. Stock Market ETF (ITOT). The August proposal also set restrictions on fees, foreign investments and ESG funds, and would require eligible indexes to be primarily domestic, excluding industry-based ownership interests and offering a public methodology.
Nearly 70 million accounts have been created, more than 60 million through automatic enrollment by Treasury. The government seeds accounts with $1,000 for children born from Jan. 1, 2025 through Dec. 31, 2028 under a pilot program, and annual contributions from parents, individuals and employers are capped at $5,000, with nonprofit donations exempt from the cap.
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