What are Trump Accounts?
Trump Accounts, established under the One Big Beautiful Bill Act, are new savings accounts for children currently under the age of 18 years old. These accounts are scheduled to become available for opening in July 2026.
What kinds of contributions can be made?
1) Federal Government
- The Federal Government will make a $1,000 contribution to any children born between January 1, 2025, and December 31, 2028 (US citizens with a Social Security Number).
2) Private Contributions
- Parents or any other individuals (grandparents, aunts, uncles, etc.) can make private contributions for children who are under 18.
3) Employer Contributions
- Your employer can contribute up to $2,500 total for all your children under the age of 18. This is meant to be an annual limit, but it is not yet clarified.
4) Tax Exempt Organizations
- Tax exempt organizations or government agencies can also make contributions to a targeted group of children under the age of 18.
Are there contribution limits?
From private contributions, the annual limit per child cannot exceed $ 5,000. The employer contribution of $2,500 counts toward this $5,000. The Federal Government’s or Tax-Exempt Organizations’ contributions are not counted towards the $5,000 limit.
When can my child take distributions/withdrawals?
Withdrawals are not allowed before the child turns 18 unless it is a trustee-to-trustee transfer to a qualified ABLE contribution, excess contribution, or death. Once the child turns 18, their options are…
- Convert to a Roth IRA
- Keep as is and let it grow as a Traditional IRA.
- Take a distribution
- If any contributions were made by parents or other individuals, those would be on an after-tax basis. All other contributions and earnings will be fully taxable when withdrawn, and a 10% penalty will apply if under the age of 59 ½, unless there is an exception. These exceptions are the same as the exceptions for a withdrawal from a Traditional IRA prior to age 59 ½.
How to Set Up a Trump Account
- Visit www.trumpaccounts.gov
- Complete the IRS Form 4547
As these Trump Accounts continue to be fleshed out, please be assured that we’ll continue to provide relevant updates and resources to keep you informed and give you peace of mind. Have other questions about these accounts? Or interested in a consultation to further discuss the details? Click here to contact us now. Or click here to learn more about our Financial Planning & Investment services.
Blog by Kiran Sharma – Partner, Wealth Advisor
Learn more about Kiran and the rest of the Storen Financial team here.