Trump Account Investment Options Not Yet Clarified Amid Calls for Greater Diversification

The Internal Revenue Service has slowly rolled out guidance on Trump Accounts—tax-advantaged investment accounts for children created under 2025 tax law—but has not yet clarified the investment rules governing the accounts.

For example, the most recent guidance addressed the mechanics of key features, such as implementing a pilot program that would deposit $1,000 into accounts for certain eligible children.

In December 2025, the IRS provided guidance on these accounts—also known as 530A accounts, based on the section of the Internal Revenue Code that created them. The agency stated that eligible investments must include low-cost index funds tracking U.S. company stock. Specifically, according to the guidance, U.S. equities must make up at least 90% of the index tracked by the investment fund. The tax agency also invited industry comments on the 90% threshold.

Should Accounts Have Access to International Markets?

In guidance on other aspects of the accounts earlier this month, the IRS stated that “Investments in a Trump account must track the returns of a broad index of equities in primarily U.S. companies for which regulated futures contracts are traded, avoid the use of leverage, and avoid annual fees and expenses above 0.1%.”

As a result, the IRS has received several comment letters from investment managers and their advocates calling for greater diversification in the permitted investments, including more international exposure.

Vanguard, a manager that often advocates for international investments, commented in its letter that the current rule would leave account holders missing out on higher returns and diversification. International stocks have recently outperformed U.S. markets, according to Fidelity.

The Investment Company Institute, in a separate letter, asked the regulator to broaden the universe of investments eligible for inclusion in the 530A accounts. As currently written, the ICI stated that the eligible investments would be: “unnecessarily restricting the already narrow range of eligible investments will detract from the success of the Trump Accounts program.”

Although diversification is a fundamental principle of investing, these accounts are partially designed to encourage Americans—especially those new to investing—to get started. As a result, experts emphasize that when structuring investment options for these accounts, striking the right balance between simplicity and diversification is essential.

“One potential benefit of this structure is that it creates guardrails while preserving modest flexibility, ensuring that most assets support domestic investment goals while still giving account holders some choice,” says Olivia Mitchell, a professor at the Wharton School of the University of Pennsylvania specializing in employee benefit plans. “It may also simplify decisionmaking, as a narrower menu will reduce confusion and decision paralysis, particularly for first-time investors.”

According to Mitchell, for savers with longer time horizons, diversification becomes a core risk management function, rather than an optional enhancement. The accounts in question are intended to be for children—including newborns—and to remain almost entirely untouched until the beneficiary reaches age 18. The money can then be withdrawn for a few specific purposes: educational expenses, home purchases and starting a business.

By design, a majority of 530A account holders would likely have longer-term investment horizons, since following the accounts’ “growth period,” they will operate under the same rules as a traditional IRA and likely become a retirement savings vehicle.

“Since less-experienced savers tend to rely more heavily on plan design to protect them from avoidable risk, limiting diversification shifts additional responsibility onto individuals who may not be well-equipped to manage it effectively,” Mitchell says.

Or Is a Simple Setup Preferable?

Meanwhile, Annamaria Lusardi, a finance professor at Stanford University and an expert in financial literacy, says these accounts already serve as a valuable learning tool for children and parents new to investing. She argues that keeping the accounts simple—rather than introducing complex global investing options—will lead to better outcomes for first-time investors.

“It’s just much more complex to say, ‘Let’s invest in the global economy.’ That’s a much harder concept,” Lusardi explains. “These accounts already invest in the whole U.S. economy, which itself is a significant part of the global market.”

According to Lusardi, diversification should be a secondary lesson for beginner investors. She recommends that the accounts remain largely focused on U.S. investments, with only modest additions of diversification. This view is supported by public comment letters, which, while calling for some diversification, still favored primarily U.S.-based investments.

Lusardi also stresses that features like the $1,000 in federal seed money for children born during President Donald Trump’s second term—funds that are locked in for at least 18 years—are more effective at teaching key investing principles, such as the value of a long investment horizon, reducing fear of losses and understanding compounding. She adds that automatic enrollment would further support these educational goals, though recent IRS guidance clarified that automatic enrollment will not be available for these accounts.

Ultimately, Lusardi maintains that the accounts should remain straightforward, even if that means sacrificing some diversification.

“Complexity can be a big detriment to action,” she says.