Written by Robin Bodine, CPA
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 answer
Trump Accounts are new tax‑advantaged investment accounts that let parents save for their child’s future from birth. Eligible kids (U.S. citizens born 2025–2028) receive a one‑time $1,000 seed contribution, and annual contributions from family and employers can total up to $5,000.
|
Feature |
Details |
|
Eligibility |
U.S. citizens under 18; birth years 2025–2028 qualify for $1,000 seed. |
|
Opening |
Parent, guardian, adult sibling or grandparent files IRS Form 4547 or uses the online portal. |
|
Individual Contribution Limit |
Up to $5,000 per child per year. |
|
Employer Contribution Limit |
Up to $2,500 annually. |
|
Investment Options |
Low‑cost U.S. stock index funds and ETFs with expense ratios ≤0.10%. |
|
Withdrawal |
Generally locked until the year the child turns 18; account transitions to IRA rules thereafter. |
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.
Although you can elect to open the account anytime, contributions cannot begin until July 4, 2026.
Contributions may come from a wide range of sources:
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.
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.
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.
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.
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.
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.
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
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.
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.
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.
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.
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.