The One Big Beautiful Bill Act, signed into law on July 4, 2025, introduced a new savings opportunity for families: Trump Accounts. Launching July 4, 2026, parents, guardians, and other authorized individuals will be able to open these child-owned retirement accounts to help invest for a child’s future. As with any new financial tool, it’s worth understanding how these accounts work, who qualifies, and how they may fit into a broader financial plan.

How do Trump Accounts work?

The Trump Account is a custodial-style individual retirement account for children that allows parents or guardians to invest on behalf of the child. The child can also contribute to the account on their own behalf. The account is fully in the child’s name and their parent or guardian is the sole custodian of the account until the child turns age 18.

 

Who is eligible?

The account is for a child who has not turned age 18 before the end of the calendar year in which the election to create the account is made. The child must have a valid Social Security number.

 

What are the contribution limits for Trump Accounts?

Parents, guardians, or the child can contribute up to $5,000 per year to the account. Employers can also contribute up to $2,500 per year to the account. These employer contributions count toward the overall $5,000 limit. There are no earned income requirements for Trump Accounts.

 

What is the $1,000 pilot program for Trump Accounts?

If your child is born between January 1, 2025 and December 31, 2028, $1,000 will be deposited into their Trump Account.

 

What are the tax benefits of Trump Accounts?

The $1,000 deposited for children who qualify for the $1,000 pilot program is tax-free. Potential earnings on after-tax contributions can grow tax-deferred, and eligible distributions will generally be taxed at the beneficiary’s income tax rate.

 

How do distributions or withdrawals from a Trump Account work?

Funds cannot be withdrawn or distributed from a Trump Account for any reason prior to the child turning age 18. After the child turns 18, the Trump Account transitions into a traditional individual retirement account. The child is now considered the beneficiary of this account. Unless an exception applies, any distribution made before the beneficiary turns age 59 ½ is subject to a 10% tax penalty. Normal distributions after the beneficiary turns age 59 ½ are taxed at the beneficiary’s income tax rate.

 

How are the funds in the Trump Accounts invested?

According to www.trumpaccounts.gov, funds will be invested in a diversified investment vehicle designed to maximize long-term growth while minimizing risk. Additional investment options will be added.

 

How do I open an account?

You can elect to open a Trump Account for your eligible children using IRS Form 4547. You can do this when you file your taxes or by submitting the form through the secure IRS website called Individual Online Accounts, or IOLA.

 

 

There is a Trump Account mobile app available through the Apple App Store or Google Play. For more information about Trump Accounts visit www.trumpaccounts.gov or call 866-872-4547.

 

For investment guidance contact a Certified Financial Planner or Registered Investment Advisor.