Treasury/IRS Notice of Proposed Rulemaking Guidance on Eligible Investments for Trump Accounts

Summary

SIFMA provided comments to the Internal Revenue Service (IRS) on proposed regulations governing eligible investments for Trump Accounts. SIFMA supports efforts to help Americans build long-term savings and recommends streamlining investment eligibility through a safe harbor for trustees, improving correction procedures, and clarifying disclosure requirements to reduce operational complexity and support effective implementation.

Excerpt

The Securities Industry Financial Markets Association ("SIFMA") ¹ supports the goal of Trump Accounts and Treasury's efforts to effectively implement the statutory requirements. Helping Americans build long-term savings, including for retirement, is among the most important roles of the U.S. capital markets, and Trump Accounts can significantly contribute to this objective. As Treasury works to implement Trump Accounts, we support practical solutions and welcome working with Treasury and other stakeholders toward achieving this goal.

I. Executive Summary

The proposed regulation provides guidance on eligible investments for Trump Accounts and asks for both general comments and specific comments with respect to trustee fees, correction procedures, and philanthropic stock contributions.

Our recommendations include:

• Streamline investment eligibility by creating a safe harbor for investments meeting statutory requirements as determined by trustees.
• Improve correction procedures by easing consequences and adding Trump Accounts to EPCRS.
• Clarify disclosure requirements to apply to responsible parties during the growth period.

II. Streamline investment eligibility by creating a safe harbor for investments meeting statutory requirements as determined by trustees

The proposed regulations create a detailed framework for determining whether an investment qualifies as an eligible investment, including standards relating to index tracking, leverage, securities lending, and qualified indices. Trustees should be authorized to use the specific framework Treasury has created to determine whether an investment meets the eligibility requirements.

We recommend that Treasury establish a safe harbor under which a trustee may treat a mutual fund or ETF as an eligible investment if it meets the requirements and definitions of section 1.530A-3(b) - (f) as proposed. Such a safe harbor would significantly reduce operational complexity while ensuring that trustees may confidently offer a range of qualifying investment options. ² The safe harbor should expressly permit trustees and custodians to rely in good faith on public information, including but not limited to prospectuses and other SEC filings, index methodologies, exchange information, and recognized third-party data sources. Trustees and custodians should not be required to independently recalculate fund expenses, conduct real-time reviews of underlying holdings, or perform legal or quantitative analyses beyond a reasonable review of available information.

The proposed regulation should also clarify that investments approved by Treasury for use by the initial trustee are automatically deemed to be eligible investments and do not require a separate determination by trustees. Receiving trustees should likewise be permitted to rely on a transferring trustee's determination of investment eligibility for assets transferred in-kind to a rollover Trump Account. Receiving-trustee reliance should also extend beyond investment eligibility to other information reasonably necessary to administer a rollover Trump Account, including the account's status, contribution history, basis information, prior reporting, and beneficiary and responsible-party information. A receiving trustee that reasonably relies in good faith on records and information provided by a transferring trustee or other authorized source should not be required to independently verify the account's historical activity. In addition, a receiving trustee should not be responsible for compliance failures that occurred before the transfer, absent actual knowledge of the failure.