The Treasury Department and IRS proposed rules Thursday that would ban ESG-focused funds from Trump Accounts, the tax-advantaged savings accounts created for American children. The proposal caps fees at 0.1%, requires funds to track mostly-US indexes, and gives trustees 30 days to divest any holding that later falls out of compliance.
The Treasury Department proposed new rules that would formally exclude ESG-focused funds from Trump Accounts, the savings vehicles set up for children under the One Big Beautiful Bill Act. The government is treating ESG funds as "sector-specific," a category the underlying law doesn't permit. Under the proposal, the exclusion covers any fund that tracks an ESG index or markets itself around sustainability branding.
What the accounts allow
Trump Accounts, formally called 530A accounts, are built for children born between 2025 and 2028. Each one starts with a $1,000 government seed contribution and allows up to $5,000 in annual contributions, a cap that adjusts for inflation over time. No withdrawals are allowed until the beneficiary turns 18, after which distributions get taxed like a traditional IRA.
The eligible lineup includes funds such as the State Street SPDR Portfolio S&P 500 ETF, the iShares Core S&P 500 ETF, and the Vanguard Total Stock Market ETF. To qualify, a fund must track an index made up of at least 90% US companies by weight, cap annual fees at 0.1%, and avoid leverage entirely.
Fees, compliance and what's still open
The 0.1% cap doesn't reach every cost tied to the accounts. The fee limit excludes trustee fees, the charges firms impose for administering an account, and Treasury is seeking public comment on whether to limit or ban those separately. Officials are also asking for comment on allowing charitable donations of appreciated stock into the accounts, an option that can appeal to wealthy donors because it generates a deduction while avoiding capital-gains tax on the appreciation.
Enforcement falls on the trustees managing each account. They must verify compliance yearly, and if an ineligible holding turns up, they have 30 days to divest it. The accounts officially launched on July 4, 2026, though sign-ups began earlier, and enrollment has already passed 500,000 families.
Sources: Crypto Briefing, The Wall Street Journal
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