From time to time, new financial programs emerge that promise to expand how families save and invest for the future. Recently, we’ve been receiving a number of questions about Trump Accounts, a newly created type of investment account designed for children.
As with many new policies, the details are still evolving. Congress has passed legislation establishing these accounts, but the IRS is currently in the process of drafting the final regulations that will determine exactly how they operate. The information in this post is based on the IRS Notice of Intent to issue regulations under Section 530A and may change as additional guidance is released.
When new financial tools appear, the most important question isn’t simply how they work – it’s how they fit into a thoughtful financial life. In this post, we’ll walk through the structure of Trump Accounts, how they function during childhood and adulthood, and where they may (or may not) fit within a broader financial plan.
We’ll cover:
- What a Trump Account is
- How the account works during a child’s early years
- How the account changes once the child reaches adulthood
- When it may make sense to use one
The information discussed here is based on early legislative proposals and preliminary guidance. Final regulations have not yet been issued and the details described below may change.
Trump Accounts: What to Know at a Glance
- Trump Accounts are a new investment account for children designed primarily for long-term retirement savings.
- The program includes a $1,000 government seed contribution for certain children born between 2025 and 2028.
- Contributions during childhood are limited to $5,000 per year, and investments must track low-cost U.S. equity indexes.
- Funds generally cannot be withdrawn until the child reaches age 18, after which the account follows rules similar to retirement accounts.
- For many families, these accounts are best viewed as a supplemental strategy, rather than a primary savings vehicle.
What is a Trump Account?
A Trump Account is a new investment account created by federal legislation that allows families to save and invest for a child’s future beginning at birth. The account is owned by the child but managed by an adult until age 18, and contributions can be made by parents, employers, and certain government programs. While the account shares some similarities with retirement accounts like IRAs, it is designed as a long-term investment vehicle that begins during childhood and transitions to the child’s control in adulthood.
Trump Accounts: Age 0-17 = Growth Period
A Trump Account’s “Growth Period” kicks off when it’s opened and ends on December 31 the year before the child turns 18.
Ownership
This new account type is an irrevocable account for a child, and it is administered and controlled by an adult until the child turns 18. The adult can:
- Select available investments,
- Transfer the account to another Trump Account custodian, and
- Designate a successor responsible party.
Eligibility
All U.S. children under age 18 with a valid Social Security number (SSN) are eligible for a Trump Account. Only one funded Trump Account is allowed per child. Accounts must be opened and managed by an authorized individual (legal guardian, parent, adult sibling, or grandparent, in that order of priority). To establish an initial Trump Account, the child must:
- Be under age 18 at the end of the year (Example: born after December 31, 2008, for a 2026 election).
- Have a valid Social Security number issued before the election is made.
Note: The child must have a valid Social Security number issued before the election is made. If the child’s immigration status has changed since the number was issued, families may need to update the Social Security record to ensure eligibility.
Pilot Program: $1,000
The Treasury’s pilot program provides a one-time $1,000 seed contribution for U.S. citizens born between January 1, 2025, and December 31, 2028. Children who aren’t eligible for the seed contribution can still open a Trump Account- they just won’t receive the $1,000 contribution.
To be eligible for the $1,000, the child must:
- Be the qualifying child of an individual who anticipates that the child will be his/her qualifying child for the tax year in which the election is made,
- Be born after December 31, 2024, and before January 1, 2029,
- Not have a prior pilot program contribution election processed for them,
- Be a U.S. citizen; and
- Must have a Social Security number.
Accounts will not be opened prior to July 5, 2026. Also, there is no date currently on when the $1,000 contribution will be made to the account.
Note: It is possible that the funds run out before the end of the pilot program.
Contributions
Trump Accounts differ from traditional IRAs as it allows contributions from multiple sources and does not require the contributor to have earned income. Contributions must be made within the calendar year. During the Growth Period, the annual contribution limit for this new account type is $5,000 (adjusted for inflation annually starting in 2028).
Contributions subject to the $5,000 total (aggregated together) include:
- Individuals contributing after-tax funds,
- Employees contributing through their paycheck (waiting on final regulations to see if this is pre-tax and/or after-tax),
- Employers contributing $2,500 tax-deductible funds (this is per employee, not per dependent).
Additional contributions not included in the limit:
- Pilot program contributions (pre-tax),
- Qualified general contributions (funded by states or political subdivisions thereof, the United States, the District of Columbia, Indian tribal governments, or section 501(c)(3) tax-exempt organizations) for members of a qualified class of account beneficiaries,
- Qualified rollover contributions: the rollover Trump Account must be funded by a trustee-to-trustee transfer of the entire account balance from the child’s existing Trump Account.
Note: Contributions to this program during the growth period are not included in the child’s income. Also, contributions may be made to a Trump Account and to an IRA that is not a Trump Account for the same child during this period.
Because contributions may include both pre-tax and after-tax components, careful record-keeping may be important when determining the taxable portion of future distributions.
Eligible Investments
A Trump Account can only be invested in “eligible investments”. An eligible investment:
- Is a mutual fund or an exchange traded fund (ETF) that tracks an equity index in primarily U.S. companies (defined as 90% in U.S. based companies)
- Does not impose fees greater than 0.10%, and
- Does not allow leverage.
Distributions
During the Growth Period, NO distributions are allowed from the account, with the exception of
- Qualified rollover contributions to a rollover Trump Account,
- Qualified ABLE rollover contributions (at age 17),
- Distributions of excess contributions, and
- Distributions upon death of the account beneficiary (fully taxable in that year).
Trump Accounts: Age 18+ = Treated like an IRA
Once the child turns 18, they’ll have full control of the account, including the ability to manage and use the funds as they see fit.
Ownership
There are several options on how to handle the account after the Growth Period. On January 1 of the year the child turns 18, they could:
- Keep the account as a Trump Account which will follow the IRA rules (but you can no longer rollover to a different Trump Account). Trump Accounts are not grouped with IRAs when determining how much of a withdrawal is taxable.
- Roll over the balance to a traditional IRA (although, this is dependent on the custodian).
- Convert the account into after tax funds.
Note: Under some custodians, Trump Accounts may automatically be rolled over to a Traditional IRA.
Contributions
After the child reaches age 18, contributions to this program may be allowed but the same rules that apply to Traditional IRAs will apply:
- Earned income, and
- Increased contribution limits.
Note: Trump Accounts cannot receive SEP IRA or SIMPLE IRA contributions.
Eligible Investments
At this point, the contributions and their earnings can now be invested in any asset class that’s allowed for Traditional IRAs.
Distributions
Distributions made after the child reaches the age of 18 will be taxable in a pro rata manner (part after-tax principal, part pre-tax earnings) and a 10% penalty will apply to the earnings portion of any distribution unless:
- Over the age of 59 1⁄2 or
- One of the following exceptions:
- Funds are to be used for qualified education expenses,
- Up to $10,000 is to be used for a first-time home purchase,
- Funds are to be used for qualified medical expenses,
- Birth or adoption costs (up to $5,000),
- Disability, or
- Terminal illness.
Note: Withdrawals may be taxed at ordinary income rates depending on the tax treatment of the contributions and earnings.
When Would You Use One?
At their core, Trump Accounts are long-term retirement savings accounts for children.
While the idea of beginning retirement savings at birth can sound appealing, thoughtful financial planning usually begins with a different set of priorities. Many families find it helpful to think about savings priorities in stages, such as:
- First, secure your own retirement.
Parents protecting their long-term financial independence is one of the greatest gifts they can give their children. Check out our blog on Backdoor Roth contributions to speed up your retirement contributions. - Next, plan for education.
For many families, this is where tools like 529 college savings plans play an important role. Wondering how much to contribute to a 529 plan? Check out our blog post for more info. - Then consider additional long-term wealth building for the next generation.
Because Trump Accounts function primarily as retirement accounts, they generally fall into this third category of planning.
For many households, Trump Accounts may function best as a supplemental tool rather than a primary savings vehicle, depending on goals, eligibility, and plan features.
There may still be situations where opening one is worth exploring. For example:
- If your child is eligible for the government’s $1,000 pilot program contribution
• If an employer offers additional contributions through payroll programs
In those cases, receiving outside funding can make the account worthwhile even if you do not plan to contribute significant additional dollars yourself.
However, there are several limitations that mean other accounts are often more effective planning tools. Compared to a 529 plan, Trump Accounts:
- Do not offer state tax incentives for contributions
• Have relatively low annual contribution limits
• Restrict withdrawals until age 18
• Do not allow beneficiary changes
• Offer limited investment options
• Tax investment earnings upon withdrawal
For many families, these features may make 529 plans and retirement accounts higher-priority options to evaluate first, depending on goals and eligibility
This chart offers a comparison of various college funding methods.
|
Trump Account |
529 |
Brokerage Account (Parent) |
Roth IRA (Custodial) |
|
|
Account Ownership |
Child |
Parent |
Parent |
Child |
|
Annual Contribution Limit |
-Before Age 18: $5,000 (inflation indexed in 2028) -Can be pre or post tax -$2,500 can come from ER (pre-tax) -After Age 18: Follow IRA rules |
-No limit Note: 2026 Gift tax annual exclusion $19,000 |
None |
2026: $7,500, limited to earned income |
|
Accessibility |
Low = No access before age 18 |
Moderate = Qualified Distribution |
High = Access at any time |
Moderate = Qualified Distribution |
|
Investment Options |
Limited Before Age 18: -Index Mutual funds/ETF that are at least 90% in US companies -.10% expense ratio cap -No leverage |
Multiple: -Mutual funds -Target date/ Age-based portfolios |
Broad: Virtually any asset |
Broad: Virtually any asset |
|
Employer Contributions |
Yes |
No |
No |
No |
|
State Income Tax Deduction |
No |
Yes* |
No |
No |
|
Taxation |
-Tax-Deferred* -Capital Gains rate on Qualified Distributions -Potentially Kiddie-Tax |
-Tax-Free on Qualified Distributions |
-Taxable on Capital Gains |
-Tax-Free on Qualified Distributions |
|
Subject to RMD |
Yes |
No |
No |
No |
|
Penalty on NQ distributions |
10% + Ordinary Income Tax |
10% + Ordinary Income Tax |
None |
10% + Ordinary Income Tax |
|
Earned Income Requirement |
No |
No |
No |
Yes |
|
Qualifying Distributions |
-Age 59 ½ -Higher Education -1st Home Purchase -Health Expenses |
-$20,000/yr for K-12* -Higher Education -Test prep* -$10,000 lifetime limit student loans* -$35,000 lifetime limit Roth IRAs* |
None |
-Age 59 ½ -Higher Education -1st Home Purchase -Health Expenses |
|
Beneficiary Changes |
No |
Yes |
Yes |
No |
|
Impacts on Financial Aid |
At Child Level = 20% |
At Parent Level = 5.64% |
At Parent Level = 5.64% |
0% if distributions taken Junior or Senior of college |
*Some states
Chart note: This comparison is for general educational purposes only and may not reflect your situation. Eligibility, contribution limits, investment options, taxes, and withdrawal rules vary by account type and are subject to change. Confirm details with official plan documents and current IRS/Treasury guidance before taking action.
How This May Fit Alongside Other Priorities
For many families, this new account type may not be a first-priority savings vehicle, especially before core retirement and education goals are on track.
- Some families may consider opening an account if they are eligible for government or employer contributions.
- Some families may choose to contribute their own dollars only after other priorities are on track, such as:
- You’re able to take advantage of additional benefits available through an employer program
- You’re making progress toward your own retirement investing goals
- You have a plan for education expenses (often through a 529 plan)
How Do You Open a New Account?
Now that you have all the information. Here’s how you open a new account:
- You need to “elect to open” a Trump Account through either filing Form 4547 with your taxes or online at https://trumpaccounts.gov/.
- As of right now, it is estimated that accounts will become available July 5, 2026.
- The Treasury Department is projected to send information to activate the account starting in May 2026. You will be assigned a financial institution (custodian) who will open your account.
- At some point, you will be able to rollover your Trump Account to a new custodian if you desire.
Note: The Treasury Department is responsible for creating and overseeing Trump Accounts. At this time, the account owner will need to track tax treatment of the funds (pre-tax and after-tax portions) for distributions.
Final Thoughts
New financial programs often arrive with excitement, and sometimes confusion. Our role is to help families step back, understand the full picture, and make decisions that truly serve their long-term life goals.
Trump Accounts may become a useful planning tool for some families, particularly as regulations are finalized. But like any financial strategy, the key question isn’t simply “Is this available?”
It’s “Does this support the life we’re trying to build?”
As more guidance emerges, we’ll continue helping our clients evaluate where this account may fit within a thoughtful, values-aligned financial plan.
____________________________________________________________________________
Disclosures: This material is provided for informational and educational purposes only and does not constitute legal, tax, or investment advice. The strategies discussed may not be appropriate for all individuals or situations. Eligibility and suitability depend on your specific circumstances, financial objectives, and current laws, which are subject to change.
Any examples are hypothetical and provided for illustrative purposes only. They do not represent actual client outcomes, and results will vary. You should consult with qualified tax, legal, and financial professionals before making decisions related to the topics discussed.
SeedSafe Financial, LLC provides tax preparation and planning services for advisory clients; however, this material is for educational purposes only. Transmission of this information does not create a client-preparer relationship. Please consult with your SeedSafe advisor or a qualified tax professional before implementing these strategies.
References to third-party resources or websites are provided for informational purposes only. SeedSafe Financial, LLC does not endorse or assume responsibility for the accuracy or completeness of external content.
Advisory services are offered through SeedSafe Financial, LLC, an SEC-registered investment adviser. Registration with the SEC does not imply a certain level of skill or training.
