Trump Account Index Fund Requirements

What Qualifies as an Eligible Fund?

Under IRC Section 530A, Trump Account money must go into a specific type of investment. The rules are simple. The fund must meet two requirements:

1. It must track the S&P 500 index or a broad U.S. equity index.
2. Its expense ratio must be at or below 0.1% (10 basis points).

Both mutual funds and ETFs qualify, as long as they meet these two criteria. You do not need to pick one type over the other.

Eligible Fund Examples

Here are some of the most popular funds that meet Trump Account requirements. All track the S&P 500 and charge well below the 0.1% cap.

All four track the same index. The main difference is cost. Over 18 years, even small expense ratio differences add up. See our fee comparison article for the exact dollar impact.

What Does NOT Qualify

The rules are strict about what you cannot invest in. None of the following are allowed in a Trump Account:

• Individual stocks — No Apple, Tesla, or any single company shares
• Bonds or bond funds — Not even U.S. Treasury bonds
• Cryptocurrency — No Bitcoin, Ethereum, or crypto ETFs
• Real estate or REITs — No real estate investment trusts
• International-only funds — Must be U.S. equity focused
• Sector funds — No tech-only, healthcare-only, or energy-only ETFs
• Actively managed funds — Must be passive index funds
• Funds with expense ratios above 0.1% — Even if they track the S&P 500

Why Index Funds?

Congress chose index funds for Trump Accounts for three important reasons:

1. Low Cost

Index funds charge a fraction of what actively managed funds cost. The average actively managed stock fund charges around 0.6% to 1.0% per year. Trump Account eligible funds charge 0.02% to 0.09%. Over 18 years, that difference saves your child thousands of dollars.

2. Broad Diversification

An S&P 500 index fund holds shares in 500 of the largest U.S. companies across every major industry. Your child's money is not riding on one company or one sector. It is spread across the entire U.S. economy.

3. Proven Track Record

The S&P 500 has delivered an average annual return of roughly 10% nominal (about 7% after inflation) over its history. No 18-year period has ever produced a negative total return. That long-term consistency is exactly what a child's account needs.

How to Choose Your Fund

The parent (or legal guardian), called the "authorized individual" in the law, selects the fund. Here is a simple approach:

1. Check what your custodian offers. Not every broker carries every ETF. Confirm which eligible funds are available.
2. Pick the lowest expense ratio. Since all eligible funds track the same index, the one with the lowest fee will give your child slightly more growth.
3. Set up contributions and leave it alone. You do not need to check the account daily. The fund tracks the market automatically.

You can also switch between eligible funds later if a lower-cost option becomes available. For a detailed ETF comparison, see Best S&P 500 ETFs for Trump Accounts.

The Bottom Line

Trump Account investment rules are intentionally simple. Your money goes into low-cost index funds that track the U.S. stock market. No individual stocks. No crypto. No complex decisions. Just steady, diversified, long-term investing for your child's future.

Want to see how fees affect your child's balance? Try the fund expense tracker. For answers to more investment questions, visit our investment FAQ.