Trump Accounts for Kids: Tax‑Advantaged Savings Guide

Written by Robin Bodine, CPA

What Are Trump Accounts and Why Do They Matter?

Trump Accounts were created by the 2025 One Big Beautiful Bill to help children build wealth early. Unlike 529 plans, these accounts don’t require earned income and funds can eventually be rolled into a traditional or Roth IRA. For many families, especially those with lower incomes, the combination of a government seed contribution and tax‑deferred growth offers a rare opportunity to give kids a financial head start. Parents often ask whether they should open one. The short answer is: if your child is eligible, there is little downside to starting early.

Quick Facts Table

How to Open and Fund a Trump Account

Who Can Open the Account?

Any parent or legal guardian can open a Trump Account on behalf of a child under 18. If a parent isn’t available, an adult sibling or grandparent may file the election. To establish the account, you’ll need the child’s Social Security number and must submit IRS Form 4547 or complete the online form at  trumpaccounts.gov . This form should be filed no later than December 31 of the year before your child turns 18 to secure eligibility.

When Can You Fund It?

Although you can elect to open the account anytime, contributions cannot begin until July 4, 2026.

Who Can Contribute?

Contributions may come from a wide range of sources:

• Parents and guardians: After-tax money, similar to Roth IRA contributions.
• Relatives and friends: Anyone can contribute up to the annual limit on behalf of the child.

• Employers: Businesses may add up to $2,500 per year for employees’ children.

• Governments & charities: State or local governments and charitable organizations can make unlimited contributions; these gifts don’t count toward the $5,000 cap.

• Private philanthropic contributions: Some private programs may provide additional Trump Account funding for eligible children. For example, Michael and Susan Dell announced a pledge to provide $250 deposits for certain children who do not qualify for the federal $1,000 seed contribution. The deposit is expected to be added to qualifying Trump Accounts once the account is opened or activated, while funds are available.

   

What About Taxes?

Your own contributions are made with after‑tax dollars. This means withdrawals of your principal are not taxed, but investment earnings will be taxed when the account is rolled into a traditional IRA. By contrast, the government’s $1,000 seed and employer contributions are fully taxable upon withdrawal. Consider working with a tax advisor to decide whether to convert to a Roth IRA at age 18.

How Investments and Growth Work

The goal of Trump Accounts is to encourage long‑term investing. During the growth period (from account opening until December 31 of the year before your child turns 18), funds must be invested in broad U.S. stock index funds or ETFs with expense ratios no higher than 0.10 %. Diversified index funds typically offer steady growth over decades and are well‑suited to a child’s long time horizon. After the child turns 18, investment restrictions lift and you may roll the balance into a traditional or Roth IRA, where the full menu of mutual funds, ETFs, and individual securities becomes available.

Withdrawal & Rollover Rules

Because Trump Accounts are designed for long-term savings, withdrawals generally are not allowed during the account’s growth period, which ends before January 1 of the calendar year in which the child turns 18. During that period, money can generally leave the account only in limited situations, such as a qualified rollover to another Trump Account, a qualified ABLE rollover, a return of excess contributions, or a distribution after the beneficiary’s death.

Benefits of Trump Accounts for Kids

• Early compounding: Starting at birth or early childhood means contributions benefit from nearly two decades of compounding.

• Inclusive eligibility: Unlike Roth IRAs, children don’t need earned income to qualify.

• Financial education: Opening an account provides a practical way to teach kids about investing and the power of compound interest.

• Complementary to other plans: You can still contribute to 529 plans or custodial accounts; the Trump Account doesn’t replace them.

• Potential for matching contributions: Employer matches and government or charitable gifts can significantly boost the balance.

Practical Steps to Get Started

1. Confirm your child’s eligibility: Make sure your child has a Social Security number and review whether they qualify for the $1,000 seed contribution (birth years 2025–2028).
2. File the election form: Download Form 4547 or use the online portal. Many experts recommend filing the form with your 2025 tax return so the account is ready when contributions open.
3. Plan your annual contributions: Decide how much you, relatives, and your employer will contribute each year. Coordinating contributions helps ensure you don’t exceed the $5,000 limit.
4. Choose your index fund: Once contributions begin, select a low‑cost U.S. stock index fund or ETF with an expense ratio below 0.10%.
5. Monitor and adjust: Review your account annually and prepare for the rollover to a traditional or Roth IRA as your child approaches 18.

Frequently Asked Questions

When is the deadline to open a Trump Account?

You must file Form 4547 by December 31 of the year your child turns 17 to remain eligible. Earlier is better so your child is ready to receive contributions when funding opens in July 2026.

Does my child have to be born after 2025 to be eligible for a Trump Account?

No. Any minor with a Social Security number can have a Trump Account as long as the election is filed before the deadline. The requirement to be born between January 1 2025 and December 31 2028 applies only to the federal seed contribution; children in that date range receive a $1 000 government deposit. Children born before 2025 can still open a Trump Account, but they will not receive the seed money

Can my child have both a Trump Account and a 529 plan?

Yes. Trump Accounts complement, rather than replace, existing options like 529 plans and custodial Roth IRAs. A 529 plan may offer better tax treatment for education expenses, while a Trump Account prioritizes long-term and retirement savings.

Who controls the account after my child turns 18?

Once your child reaches 18, the Trump Account will transition into their own traditional or Roth IRA. They gain control of the account and can decide how to invest or withdraw the funds, subject to standard IRA rules.

What happens if my child becomes a non-resident?

Eligibility for contributions and withdrawals is tied to U.S. tax rules. If your child becomes a non‑resident or citizen of another country, consult a tax advisor to understand how residency changes might affect the account.

What is the Dell Foundation $250 contribution?

Michael and Susan Dell announced a private philanthropic pledge intended to provide $250 deposits for up to 25 million children who are not eligible for the federal $1,000 Trump Account contribution. Reports indicate the contribution is aimed at children age 10 and under in qualifying ZIP codes. This $250 contribution is separate from the IRS annual contribution limit and should not be confused with the federal $1,000 seed contribution.

Next Steps

Trump Accounts offer families a new way to build generational wealth. With a $1,000 government seed for eligible newborns, low‑cost investments, and the flexibility to eventually roll funds into an IRA, there are compelling reasons to consider opening one. The key is acting early: File the election form, coordinate contributions, and educate your child about the benefits of long‑term investing.

For official program details, see the IRS Trump Accounts page.