Trump Accounts: A New Way to Save for Your Child’s Financial Future
Starting this year, there will be a new tax-advantaged IRA designed specifically for kids. This new account is also known as a Trump account. This account was introduced when Congress passed the One Big Beautiful Bill Act (OBBBA) in July of 2025. Up until recently, there was not a ton of guidance on how this account would operate. But now we have much more information on how to open these accounts and maintain them until a beneficiary reaches age 18.
Who is Eligible?
A parent or legal guardian will be overseeing this account for the benefit of the child, also referred to as the beneficiary. To be considered an eligible beneficiary, the child must have a Social Security number and be a U.S. citizen. The child must also be under 18 by December 31st of the year the account is opened.
Account Establishment
An important piece of information we did not know until now was how to open this type of account. This can be done in one of two ways.
- Submitting “IRS Form 4547, Trump Account Election(s)”. You can file this form with your 2025 tax return, so the account is available by July of 2026.
- Using an online portal, which should be available by the summer of 2026.
After an election is made, you will receive information beginning in May 2026 on how to activate this account. If you want to receive active updates, you can submit your email address by visiting this link – https://www.trumpaccounts.gov/.
Pilot Program
There is a special pilot program for U.S. citizens born between 2025 and 2028. These children are eligible to receive a $1,000 contribution from the federal government into their Trump account. The contribution will be made no later than July 4th, 2026, provided the account election is made.
Contribution Limits
You can start contributing to a Trump account on July 4th, 2026, as long as the account is open and activated. Individuals can contribute up to $5,000 per child per year. Contributions must be made by the end of the year, December 31st.
Employers can also make contributions for their eligible employees or their dependent children, up to $2,500 per employee annually. Treasury is working closely with the Department of Labor to issue guidance clarifying how employers can facilitate Trump accounts without creating an ERISA-covered plan. This contribution from employers will count toward the overall $5,000 limit.
Investment Restrictions
Until the child reaches age 18, there will be some investment restrictions for a Trump account. Funds in a Trump account may only be invested in low-cost index mutual funds or ETFs whose underlying securities are composed predominantly of U.S. based companies.
Account Distributions
From the time the account is established until the child turns 18, this period of time is referred to as the “growth period”. During the growth period, no distributions are allowed unless they are a qualified distribution. Qualified distributions include certain rollover contributions, distributions of excess contributions, or a distribution upon the death of a child.
Beginning the year the child turns 18, the account will operate very similarly to a Traditional IRA. Contributions are made on an after-tax basis, but earnings on these contributions are taxed as ordinary income. Like Traditional IRAs, there is a 10% penalty for any early withdrawals before age 59 ½ that don’t qualify as an exception. Exceptions include distributions for a first-time home purchase or for qualified higher education expenses, for example.
There are many ways to save for your child’s financial future. Trump accounts are designed to complement these other savings options. If you start contributing monthly now, even a small amount, it will give your child a huge jump-start towards retirement. A consistent contribution, no matter how big or small, can have a big impact.