What are Trump Accounts?
Established under the One Big Beautiful Bill Act, Trump Accounts are tax-deferred savings accounts designed for children under age 18. As of July 2026, families can officially open accounts and make contributions. The goal is to encourage long-term investing from an early age, helping children build wealth over time. Unlike a 529 plan, which is primarily intended for education expenses, Trump Accounts function more like a retirement savings vehicle with special rules for minors.
What kinds of contributions can be made?
1) Federal Government
Children born between January 1, 2025, and December 31, 2028, who are U.S. citizens with a Social Security Number, may qualify for a one-time $1,000 Federal contribution.
2) Private Contributions
Family members and friends can contribute on behalf of a child until the child reaches age 18.
3) Employer Contributions
The maximum annual employer contribution is $2,500 per employee, applicable to eligible Trump Accounts owned by the employee or their dependent children under the age of 18.
4) Tax Exempt Organizations
Certain charities and government organizations may also contribute to qualifying groups of children.
Are there contribution limits?
Private contributions are currently limited to $5,000 per child each year, with inflation adjustments beginning in 2028. Employer contributions count toward this annual limit, while government and qualifying charitable contributions do not.
*Please note: If contributions exceed the annual limit, the excess must be removed. While the excess contribution itself isn’t taxable, any earnings associated with that excess may be subject to a significant tax penalty.
How are Trump Accounts taxed?
The tax treatment depends on where the contributions came from. Contributions made by parents, grandparents, or other individuals are made with after-tax dollars, meaning those original contributions can generally be withdrawn tax-free. However, the following are taxable when distributed:
- Federal government contributions
- Employer contributions
- Contributions from tax-exempt organizations
- Investment earnings
*Please note: Account holders are advised to review local guidelines with their state tax agency to ensure compliance with regional regulations.
Where are the funds initially invested?
The U.S. Treasury selects low-cost, S&P 500-tracking index funds to ensure at least 90% of assets are invested in domestic equities. The program, managed in partnership with Bank of New York Mellon and Robinhood, plans to introduce four additional investment options, allowing parents to adjust portfolio allocations.
When can the money be used?
One of the biggest differences between a Trump Account and other savings accounts is that the money is meant to stay invested until the child reaches adulthood. In most cases, the funds cannot be withdrawn before age 18. The only exceptions are a few limited situations, such as correcting excess contributions, transferring the money to an ABLE account, changing custodians, or if the child passes away. Beginning January 1 of the year the child turns 18, the account owner can:
- Leave the money invested as is, maintained as a Traditional IRA.
- Take withdrawals (taxes and penalties may apply).
- Roll the account into another Traditional IRA or an eligible employer retirement plan.
- Convert the account to a Roth IRA (income taxes may apply on the conversion).
After January 1 of the year the child turns 18, the account is treated like a Traditional IRA. That means withdrawals before age 59½ may be subject to a 10% early withdrawal penalty unless an IRS exception applies. Because these accounts are designed for long-term savings, families should plan on leaving the money untouched throughout the child’s childhood.
How do you open a Trump Account?
Before contributions can be made, an authorized adult must establish the account by completing IRS Form 4547. The form can be submitted electronically, by mail, or through the official Trump Accounts website. Families seeking the Federal government’s $1,000 contribution must also complete the required election. For added convenience, families can also use the Trump Accounts mobile app to monitor contributions and track savings on their phones.
*Please note: Trump Accounts are limited to one per child.
We’re Here to Help
Trump Accounts introduce another option for families looking to invest in their children’s future—but it is important that you understand the rules around them. Make sure to consult with a tax-informed advisor. Additional information can also be found on the IRS website and the official Trump Account website. If you’re wondering whether a Trump Account fits into your family’s financial plan, our team is here to help. We’ll walk through your goals, explain your options, and help you build a strategy that supports your family’s future. Ready to learn more? 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.