Key Points:
- Trump Accounts are a tax-deferred investment option that helps families save for children under age 18.
- These accounts operate like traditional IRAs, restrict access before the end of the “growth period,” and limit investments to low-cost U.S. stock index funds.
- A legal guardian, parent, adult sibling, or grandparent may open an account for an eligible child, and U.S. citizen children born between 2025 and 2028 may receive a one-time $1,000 federal contribution.
- Beginning July 4, 2026, families, employers, charities, and government entities may contribute up to $5,000 per child each year, with some contributions allowed beyond that limit.
- Parents or guardians can open Trump Accounts using IRS Form 4547 or the online portal at TrumpAccounts.gov and should evaluate them alongside other child savings options.
The One Big Beautiful Bill Act (OBBBA), also known as the Working Families Tax Cuts, introduced Trump Accounts, a new tax-advantaged savings and investment option for children. Designed to support long-term investing for minors, this account gives families an additional way to set aside money for a child’s future while benefiting from tax-deferred growth.
If you have minor children, here’s what you need to know about Trump Accounts, along with key considerations for those who may want to incorporate them into a broader family savings strategy.
WHAT ARE TRUMP ACCOUNTS, AND HOW DO THEY WORK?
A Trump Account is a government-supported investment account available to children under age 18. Accounts are available beginning July 2026, with contributions starting July 4, 2026.
Trump Accounts function similarly to a traditional IRA in that investments can grow on a tax-deferred basis. The Treasury Department refers to the period from account opening through December 31 of the year in which the child turns 17 as the “growth period.” You generally cannot withdraw funds during this period, reinforcing their role as a future-focused savings vehicle.
Once the growth period ends, the IRS treats the account like a traditional IRA. At that point, the account holder takes ownership and may continue contributing, provided they meet earned income requirements and stay within applicable IRA contribution limits. Withdrawals follow traditional IRA rules: distributions before age 59½ face a 10% penalty on top of ordinary income tax, unless an exception applies.
It’s also worth noting that there is no earned income requirement to contribute to a Trump Account during the growth period. Contribution limits for Trump Accounts and IRAs are separate, so funding a Trump Account does not reduce a family’s ability to contribute to an IRA.
In addition, eligible families may transfer assets from a Trump Account to an ABLE account in the year the child turns 17.
BNY, in partnership with Robinhood, will initially create and hold all Trump Accounts as the Treasury Department’s designated financial agent. Parents will have the option to transfer the account to a different financial institution through a trustee-to-trustee rollover if they prefer. Only one funded Trump Account is permitted per child.
Lastly, investments within Trump Accounts during the growth period are limited to low-cost, broad U.S. equity index funds. Fund expenses are capped at 0.1%, and leveraged funds aren’t allowed.
WHO’S ELIGIBLE TO OPEN A TRUMP ACCOUNT?
Any child with a Social Security number may be eligible for a Trump Account, as long as the account is active before the calendar year in which the child turns 18. The proposed Treasury Department rules establish a priority order for who may open an account on a child’s behalf: a legal guardian first, followed by a parent, adult sibling, or grandparent of the beneficiary.
In June 2026, First Lady Melania Trump announced a “Fostering the Future” program, under which state child welfare agencies will be able to open Trump Accounts for foster youth in their care. However, a state agency can’t claim the $1,000 pilot deposit for a foster child. Only a parent or foster parent who expects to claim the child as a dependent can elect that.
In addition, certain U.S. citizen children born between January 1, 2025, and December 31, 2028, may be eligible for a special federal contribution to help jump-start the account. This feature encourages early participation and long-term investing from a child’s earliest years.
THE $1,000 PILOT DEPOSIT
For children born between 2025 and 2028, the Treasury Department will make a one-time $1,000 contribution to each eligible child’s Trump Account. To qualify, the child must be a U.S. citizen with a valid Social Security number, and a parent or legal guardian must elect to participate. The government will deposit this money no earlier than July 4, 2026, after the Treasury verifies that the account is active. This pilot deposit does not count toward the annual $5,000 contribution limit.
To receive this benefit, the account must be opened before the year in which the child turns 18. Only individuals who can claim the child as a dependent for tax purposes are eligible to claim the $1,000 contribution for that child.
In addition to the federal pilot deposit, a private philanthropic contribution from the Michael and Susan Dell Foundation will provide an extra $250 to up to 25 million American children age 10 and under who were born before January 1, 2025, and who live in ZIP codes with median household incomes below $150,000. Because this group was born before 2025, they are not eligible for the $1,000 federal deposit, making the Dell contribution a meaningful supplement for older children who would otherwise receive no seed funding. The Dalio Foundation has also pledged $250 for eligible children in Connecticut.
TRUMP ACCOUNT CONTRIBUTION RULES
Beginning July 4, 2026, parents or guardians, grandparents, other family members, friends, and even employers may contribute to a child’s account.
Employers may contribute up to $2,500 per year, per employee, to the Trump Accounts of their employees’ children or to a minor employee’s account. While these contributions count toward the overall $5,000 annual limit, the IRS will not treat the contributions as taxable income to the employee.
Additionally, qualifying charitable organizations and government entities may contribute on behalf of children who are part of a designated “qualified class,” further expanding access to funding for eligible families. These contributions don’t fall under the $5,000 annual cap, allowing for additional funding beyond what families and employers may contribute.
The standard annual contribution limit is $5,000 per child for contributions from individuals and employers, with cost-of-living adjustments beginning after 2027. Individual contributions are made with after-tax dollars and aren’t tax-deductible. While investments grow tax-free inside the account, earnings are taxed as ordinary income upon withdrawal.
HOW TO OPEN A TRUMP ACCOUNT
A parent or legal guardian can establish a Trump Account by filing IRS Form 4547 or through the online portal at TrumpAccounts.gov. You can submit Form 4547 at any time, including with a 2025 or future federal income tax return. To be eligible, you must elect to open the account before January 1 of the year the child turns 18.
The Treasury Department has also launched the official Trump Accounts app, available in app stores since May 28, 2026. Parents and guardians who have filed Form 4547 can register with their email address to receive updates once their child’s account becomes active.
TRUMP ACCOUNTS VS. OTHER SAVINGS OPTIONS
Trump Accounts are just one of several tax-advantaged savings tools available to families. Which option makes the most sense depends on your goals, timeline, and broader financial priorities.
For families focused on education, 529 plans remain a compelling choice. Qualified withdrawals are tax-free, and the OBBBA expanded the list of eligible education expenses. Unlike Trump Accounts, assets in a 529 plan generally receive more favorable treatment when determining financial aid eligibility. In addition, up to $35,000 of unused 529 assets can be rolled into a Roth IRA, giving families additional flexibility if education costs end up being lower than expected.
Custodial accounts (UTMAs) offer even greater flexibility. They have no contribution limits and allow investments in a wide range of assets. While they don’t provide tax-deferred growth, long-term capital gains generally have more favorable tax rates, which may be lower than the ordinary income tax rates that apply to Trump Account withdrawals.
Families should also consider the practical tradeoffs unique to Trump Accounts. At the end of the growth period, the child assumes full control of the account—generally around age 18, depending on state law. While that may not be a concern for every family, parents should recognize that what could become a substantial account balance will ultimately belong entirely to the child.
Finally, it’s important to evaluate Trump Accounts within the context of your overall financial plan. For many households, maximizing a child’s long-term retirement savings may be less urgent than funding college, building an emergency reserve, or ensuring the parents remain on track for retirement. In many cases, those priorities should come first before directing significant additional savings to a Trump Account.
TRUMP ACCOUNTS AND YOUR FINANCIAL PLAN
Trump Accounts can give children an early start on long-term investing by harnessing the power of time and tax-deferred growth. Automatic government funding for eligible children, the potential for employer contributions, and a disciplined investment structure can create meaningful opportunities for long-term compounding.
That said, no single savings vehicle is right for every family. Depending on your objectives, a 529 plan, custodial account, or another strategy may offer greater flexibility or align more closely with your priorities. The right approach often involves coordinating multiple accounts to balance competing goals such as education, retirement, and long-term wealth building.
Sloan Advisory Group can help you evaluate how a Trump Account fits within your broader financial plan and determine the most effective savings strategy for your family. If you’d like to discuss whether a Trump Account makes sense for your situation, we’re happy to help. Contact us to learn more.
