ICI Champions Competition in Trump Accounts

Trump Accounts represent an important step forward in helping American families build long-term savings. Created earlier this year through the president's signature tax legislation and set to launch in July 2026, these accounts are designed to establish saving and investing habits early in life and harness the time value of money to build financial security for millions of Americans.

The Investment Company Institute is encouraging the Treasury Department to protect competition in what could become every American’s first IRA. Approximately 3 million children are born in the United States each year, and Treasury’s implementation decisions will determine whether families have genuine choice in how they save for their children’s future.

ICI's recommendations emphasize the critical importance of designing a framework that promotes competition, consumer choice, and long-term success—ensuring Trump Accounts achieve their maximum benefit.

ICI’s Sustained Engagement

Since the enactment of Trump Accounts, ICI has worked to help ensure successful implementation. Through engagement with our members, we identified key areas requiring clarification and guidance to relay to Treasury and IRS.

We have been actively consulting with ICI members to understand operational challenges and industry concerns, translating those insights into concrete recommendations for policymakers. Such advocacy represents our continued commitment to supporting Treasury’s efforts while ensuring a framework that will serve American families and promote a healthy, competitive marketplace.

When beneficiaries turn 18, these accounts become more like traditional IRAs, potentially creating a universal entry point into the retirement savings system for the American people.

Preserving a Competitive Marketplace

One key question is whether Treasury will require all new Trump accounts to be opened through a single designated provider. While this centralized approach might seem administratively simpler, we believe it would create market distortions.

Funneling 3 million new retirement accounts annually to a single financial institution would give that provider an unprecedented competitive advantage. Other firms could only offer Trump Accounts through rollovers, potentially reducing incentives to invest in the education and outreach necessary for the program’s success.

ICI has strongly advocated an open marketplace from day one. The tax law should be read to give Treasury the flexibility to establish a decentralized framework allowing any qualified IRA provider to offer Trump Accounts directly to consumers.

This approach would leverage existing industry infrastructure, reduce Treasury’s administrative burden, and promote genuine consumer choice. If Treasury selects a single custodian despite our recommendations, we urge the administration to “white label” the program by branding all materials under the Treasury Department name, not the private custodian’s.

Interpreting Investment Restrictions

Trump Account “eligible investments” are limited to mutual funds and ETFs that track qualified equity indexes, don’t use leverage, and have annual fees of no more than 0.1%. Given these already narrow parameters, we urge Treasury to use its interpretive authority to broaden investment options rather than restrict them.

The leverage prohibition requires careful interpretation. Basic U.S. equity index funds routinely use tools like bank borrowing or derivatives to maintain market exposure. We recommend Treasury clarify that the restriction targets only funds seeking leveraged returns, not funds that use such strategies for operational efficiency.

The definition of a qualified index also needs attention. The law requires indexes to be composed of equity investments in primarily U.S. companies, but doesn’t define “primarily.” We recommend interpreting this as a majority—more than 50%—of holdings in U.S. companies, maintaining a domestic focus while allowing some international diversification.

Our letter includes data demonstrating how equity markets move in cycles. Providing flexibility for international exposure within a U.S.-majority framework would help account holders manage risk without compromising the law’s intent.

Additional Critical Issues

Beyond trustee selection and investment parameters, our letter addresses numerous other implementation matters:

Reporting requirements should work like existing IRA and 529 college savings plan reporting to avoid creating unnecessary complexity. Providers need clear guidance on tracking contributions and what information must be provided for reporting.

Contribution rules allow employers to contribute up to $2,500 annually on a tax-deferred basis. Treasury should clarify how these employer contributions interact with the $5,000 overall annual contribution limit, and how employers should handle contributions when an employee has multiple children.

Donations from state or local governments and charities could provide significant additional funding, but the mechanics need clarification. How will Treasury distribute these funds among eligible children? How do the “qualified classes” of beneficiaries work and what additional conditions could a donor place on eligibility for contributions?

Account portability is essential­—beneficiaries must be able to move their accounts between providers and make additional contributions to rollover accounts, ensuring competition and consumer choice.

Our Continued Partnership

ICI remains deeply committed to supporting Treasury in launching this program successfully. Our engagement will continue as implementation proceeds. We recognize the urgency and complexity of this novel program and stand ready to engage in an ongoing basis.

By establishing a competitive marketplace, interpreting statutory restrictions liberally and streamlining administrative requirements, Treasury can ensure Trump accounts fulfill their promise to improve financial literacy and foster long-term investing habits among all Americans.