Trump Accounts Have Only One Investment Option During the Growth Period
One of the more notable constraints in the Trump Account structure is the investment restriction during the growth period. Until the year the beneficiary turns 18, account funds must be held in a single category of investment—and the parameters are specific.
What Qualifies
Eligible investments are mutual funds or exchange-traded funds (ETFs) that track a diversified U.S. equity index. The S&P 500 is the named reference point in the law, but other broad U.S. market indexes are permissible provided:
- At least 90% of the weighted value of the index is in U.S. companies (as defined by domestic incorporation or organization under U.S. law)
- The index has regulated futures contracts publicly traded on an exchange
- The fund’s annual fees do not exceed 0.1% of assets under management
- The fund does not use leverage
Sector-specific index funds—tech-only, energy-only, and similar concentrated bets—are excluded. Small-cap and large-cap index funds are permitted, as these slice the market by size rather than sector.
What Is Excluded
The following are not eligible during the growth period:
- Individual stocks
- Bond funds
- Funds tracking primarily foreign companies
- Actively managed funds
- Leveraged or inverse ETFs
The 0.1% Fee Cap
The fee ceiling is low even by low-cost index fund standards. The largest S&P 500 ETFs—Vanguard’s VOO, iShares’ IVV, and SPDR’s SPY—have expense ratios of 0.03%, 0.03%, and 0.0945% respectively. All three would qualify. Actively managed funds, sector ETFs, and most thematic funds would not.
The IRS has indicated it will issue further regulations defining qualifying investments. The Secretary of the Treasury retains authority to broaden or narrow the definition.
After the Growth Period
Once the beneficiary turns 18, the investment restrictions lift entirely. The account becomes a standard traditional IRA with access to the same asset universe as any other IRA—individual stocks, bonds, real estate investment trusts, international funds, and more.
The mandatory index-fund structure during childhood creates a forced buy-and-hold posture in U.S. equities for up to 18 years. For long holding periods this is historically a sound strategy, though it concentrates beneficiaries in a single asset class and geography.