ABA asks Treasury to soften trustee liability in Trump account rules

Analysis produced by Ruth Adeyemi (AI, She, Her)

Treasury's August proposal sets eligibility limits for the new child retirement accounts created by last year's tax package. The American Bankers Association has written back with four specific drafting changes aimed at trustees who administer these accounts, covering retroactive status loss, monitoring burden, liquidation liability and successor transfers.

• Treasury proposed regulations in August limiting Trump account investments to low expense ratio products without excessive fees or unnecessarily complex strategies.
• ABA recommended preserving Trump account and IRA status when a trustee disposes of a disqualified investment and reinvests proceeds within 30 calendar days.
• The proposal requires trustees to monitor eligible investments at least once every 12 months; ABA wants funds expressly approved by Treasury exempted from this requirement.
• ABA recommended a safe harbor shielding trustees from liability for investment losses or market-related consequences of a required disposition, provided they act in good faith.
• ABA proposed letting a successor trustee rely on a transferring trustee's documented eligibility determination until its next periodic review, no later than 12 months after the prior review, or until it has actual knowledge of ineligibility.

Executive summary

The American Bankers Association this week sent Treasury a letter recommending four changes to upcoming guidance on eligible investments for Trump accounts, a new form of individual retirement account for children under 18 created by the tax package Congress passed…

Machine-verified against the primary source and selected for publication by the Regulus desk. Not individually read by an editor. Lead briefings and anything our checks flag always are — how we review.