IRS Fixes a Gift Tax Problem with Trump Accounts — What It Means for You
- Jul 8
- 4 min read
Perspective Matters
KEY TAKEWAYS
The IRS just fixed a gift tax problem with new Trump accounts, days before they launch on July 4.
Trump accounts count as retirement accounts under IRS rules — just like Health Savings Accounts (HSAs) — not simple brokerage accounts.
Without this safe harbor, contributors could have faced surprise gift tax filing requirements (Form 709).
New retirement account rules keep arriving faster than agencies can implement them — from SECURE 2.0 to the One Big Beautiful Bill Act (OBBBA).
Working with a fiduciary who specializes in retirement accounts helps you stay ahead of these changes
Last month, I wrote about the risk of passing big legislation before anyone works out the details — what I call the “ready, shoot, aim” approach. Trump accounts are the newest example. Just before their July 4 launch, the IRS stepped in with a fix for a gift tax problem that Congress never addressed.
Here’s why this matters to you: most people don’t realize that Trump accounts — like Health Savings Accounts (HSAs) — are retirement accounts under IRS rules, not simple brokerage accounts. That distinction brings extra reporting requirements and extra risk if you get it wrong. The article below is a good example: without IRS action, contributions to Trump accounts could have triggered a huge spike in gift tax filings, at a time when the IRS already has about 25,000 fewer employees than it had at the end of 2024.
IRS PROVIDED FIX FOR TRUMP ACCOUNT GIFT TAX ISSUE
Wednesday, July 01, 2026
By Sarah Brenner, JD Director of Retirement Education
In just a few days, on July 4, Trump accounts will be available. As we come down to the wire, the IRS has stepped in to provide a safe harbor to address concerns about potential gift tax issues with contributions.
THE GIFT TAX ISSUE
Contributions to Trump accounts do not qualify under the annual gift tax exclusion ($19,000 for 2026). Only gifts of “present interest” qualify. A gift of “present interest” means a gift that the recipient can immediately access and use. Trump accounts are not considered gifts of “present interest” because they cannot be accessed until the year the child turns 18.
Congress did not include a provision in the One Big Beautiful Bill Act (OBBBA) to exempt Trump accounts, like it did many years ago for section 529 plans. Unless Congress or the IRS intervened, there was concern that a gift tax return (Form 709) would be required for individuals making Trump account contributions.
THE FIX
On June 29, the IRS issued Rev. Proc. 2026-25. This guidance provides a gift tax reporting safe harbor for Trump account contributions made before the year the child reaches age 18.
Under the safe harbor, if certain requirements are met, contributions made by individual donors to Trump accounts in a given year will not be subject to gift tax reporting requirements for that year.
The IRS said that a safe harbor was necessary for several reasons. For many of those who contributed to Trump accounts, the cost and other burdens of complying with gift tax reporting requirements could outweigh the anticipated financial savings benefit of making contributions. In addition, gift tax reporting compliance by Trump account contributors could dramatically increase the burden on the IRS, who would have to process gift tax returns for taxpayers who would be unlikely to ever be subject to gift, estate, or generation-skipping tax. Also, according to the IRS, the fact that nearly six million Trump accounts have already been opened means the number of gift tax returns filed annually could be expected to increase from roughly 300,000 to several million.
Copyright © 2026, Ed Slott and Company, LLC Reprinted from The Slott Report, July 1, 2026, with permission https://irahelp.com/irs-provides-fix-for-trump-account-gift-tax-issue Ed Slott and Company, LLC takes no responsibility for the current accuracy of this article.
As I’ve said before, this is our “new normal”: Congress passes sweeping laws, and the agencies enforcing them spend years filling in the gaps. We saw it with the SECURE Act and SECURE 2.0. Now we’re seeing it again with the One Big Beautiful Bill Act (OBBBA).
This is exactly why working with the right advisor matters. As a Certified Financial Planner® and a member of Ed Slott’s Master Elite IRA Advisor Group™, I focus specifically on the intersection of tax law and retirement accounts — Trump accounts, HSAs, IRAs, 401(k)s, and more. That’s precisely where new rules create the most confusion, and the most risk. At Prism Planning & Solutions Group, we act as fiduciaries for our clients at all times. Our job is to make sure you’re never making an important financial decision in the dark — we’ll help you understand what the rules require today, what’s still unsettled, and how to protect yourself in the meantime.
READY TO GET STARTED
Schedule an Introductory Meeting here to discuss your financial situation and get clarity on how Trump accounts, HSAs, and other retirement account rules affect you. There's no obligation—just an opportunity to get answers to your questions and see if working together makes sense for you.
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