Model federal §530A "Trump accounts" (OBBBA 2025 / Working Families Tax Cuts)

## Summary

PolicyEngine-US does not model the federal **§530A "Trump accounts"** created by the One Big Beautiful Bill Act / Working Families Tax Cuts (signed July 4, 2025). This is a tracking/roadmap issue for that gap, raised via an API-partner question.

## Current state

- **Not modeled federally.** There are no federal variables for Trump-account contributions, the Treasury seed contribution, account earnings, or the federal tax treatment of distributions.
- **Existing partial touchpoint (state only):** Arizona models a state income-tax **subtraction** for §530A distributions — `az_530a_distribution` / `az_530a_distribution_subtraction` (added via AZ HB 4168, #8714, now closed). That takes a distribution amount as an **input**; it does not model the federal account, contributions, seed, or earnings.

## What the program is (to implement against the enacted §530A text + IRS guidance)

Trump accounts are a new type of traditional IRA for the exclusive benefit of an eligible child. Key mechanics to confirm and model:

- **Contribution limit:** $5,000 aggregate/year (2026 and 2027), cost-of-living-adjusted thereafter. (Confirm the separate employer-contribution allowance and whether it sits inside/outside the $5,000 cap.)
- **Federal pilot seed:** a one-time **$1,000** Treasury contribution for eligible children under the Federal Contribution Pilot Program (children born within the pilot window — confirm the exact birth-year range).
- **Eligibility for the automatic federal contribution:** the account opener must be able to claim the child as a dependent for the Child Tax Credit; otherwise must be the beneficiary's legal guardian, parent, adult sibling, or grandparent.
- **Growth period:** from account establishment through Dec 31 of the year the child turns 17.
- **Tax treatment:** contributions are not deductible; earnings are tax-deferred during the growth period; distributions are taxed later (confirm the post-age-18 rules).

## Modeling scope / open questions

- Which pieces are in scope for a static tax-benefit microsim? The **$1,000 Treasury seed** (a transfer) and the **tax treatment of contributions/distributions** are the most directly modelable; the account balance/earnings growth is a longitudinal feature that may be out of scope or require simplification.
- Data: do we have (or can we impute) eligible-child and account-opening take-up in the dataset? Contributions and take-up would likely be dataset-assigned rather than simulated.
- Interaction with the CTC dependent test for the seed eligibility gate.

## Related

- Saver's Match roadmap (separate program): #5199
- Arizona §530A distribution subtraction (state, done): #8714

## Sources

- [Trump Accounts: Overview and Policy Considerations (CRS R48910)](https://www.congress.gov/crs-product/R48910)
- [Treasury/IRS guidance on Trump Accounts (Working Families Tax Cuts)](https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-trump-accounts-established-under-the-working-families-tax-cuts-notice-announces-upcoming-regulations)
- [Treasury/IRS proposed regs — $1,000 pilot contribution](https://www.irs.gov/newsroom/treasury-irs-issue-proposed-regulations-for-trump-accounts-contribution-pilot-program-treasury-department-to-deposit-1000-into-the-account-of-each-eligible-child)
- [IRS Notice 2025-68](https://www.irs.gov/pub/irs-drop/n-25-68.pdf)

Start with the enacted §530A text and the linked Treasury/IRS guidance, then inspect the existing Arizona variables az_530a_distribution and az_530a_distribution_subtraction. Resolve the contribution, seed-eligibility, distribution-tax, and dataset take-up questions before choosing a static-microsimulation scope. Done means the federal variables, eligibility rules, data assumptions, and validation approach are defined and implemented.

Written by the indexing model from the issue text.