By Ian Berger, JD
IRA Analyst
Question:
We have two grandchildren. One is 18 years old now, and the other will turn 18 next January (2026). Can you help me understand what I can do for each under the new Trump account rules?
Ollie
Answer:
Hi Ollie,
You will probably be unable to contribute to Trump accounts for either grandchild. Before a contribution to a Trump account can be made, an account must be opened by either the Federal government or an individual such as a parent or grandparent. However, in either case it appears that a Trump account can only be opened for children who have not turned age 18 before the end of the calendar year. This rules out any contributions for your older grandchild who has already turned age 18. In order for you to contribute for your younger grandchild (who will turn age 18 in 2026), a Trump account would have to be opened before the end of 2025. It’s doubtful that procedures for opening an account will be in place by that deadline.
Question:
Hello,
Is the pro-rata rule applicable when doing a Backdoor Roth IRA conversion if the client has an inherited IRA, but no other IRAs?
Thank you in advance for your assistance!
All the best,
Scott
Answer:
Hi Scott,
The pro-rata rule takes into account all traditional IRAs and pre-tax SEP and SIMPLE IRAs. It does not take into account inherited IRAs (or Roth IRAs and Roth SEP and SIMPLE IRAs). So, your client can do a Backdoor Roth conversion free and clear of the pro-rata rule.
The pro-rata rule treats all of a person’s IRAs as one big account. This includes SEP and SIMPLE IRAs (but not Roth IRAs or inherited IRAs). Even IRAs held at different financial institutions are aggregated.
If you have technical questions you would like to have answered, be sure to submit them to mailbag@irahelp.com, to be answered on an upcoming Slott Report Mailbag, published every Thursday.
https://irahelp.com/trump-accounts-and-the-pro-rata-rule-todays-slott-report-mailbag/