The One Big Beautiful Bill has brought numerous changes to the Internal Revenue Code. One such change is the introduction of a new type of tax-advantaged accounts open to U.S. children with Social Security numbers.
Overview
These “Trump Accounts” will work much like an Individual Retirement Account (IRA) in which the potential earnings will grow tax-free. Once the accounts become eligible for withdrawal, the money withdrawn from the accounts will be taxed at the child’s income tax rate. While the Trump Accounts can be opened for the benefit of any children aged 17 or younger, only children born between January 1, 2025, and December 31, 2028, will receive an initial contribution of $1,000 from the federal government.
Contribution Rules
Children, parents, guardians, grandparents, family members, friends, employers, and qualifying charitable organizations and government entities can contribute to Trump Accounts up to an annual contribution limit of $5,000 per child. Furthermore, the first $2,500 contributed by an employer will be excluded from the child’s taxable income, and contributions by qualifying charitable organizations and government entities will not count toward the $5,000 limit. This annual limit is scheduled to increase in line with the cost of living after 2027.
Investments and Withdrawals
Once contributions are deposited into the Trump Accounts, the funds cannot be withdrawn until the child turns 18. The funds held in the Trump Accounts will be invested in certain mutual funds or exchange-traded funds that track the overall U.S. stock markets, such as the S&P 500. These funds will not use leverage and will charge no more than 0.10% in annual fees. Once the child turns 18, the Trump Account will be treated as a traditional IRA. The account holder may continue to contribute to their Trump Account, but such contributions will be subject to IRA rules, and funds cannot be withdrawn before age 59½ without an additional 10% tax unless an exception applies.
Trump Accounts will initially be created and held with the U.S. Department of the Treasury’s designated financial agent. Parents or guardians will later be able to transfer the Trump Account to a different broker through the use of a trustee-to-trustee rollover.
Opening a Trump Account
To open a Trump Account, Form 4547 must be completed and submitted to the IRS. While not yet available, once the final version of Form 4547 is released, it may be filed at any time. The Trump Accounts are expected to become available sometime in early 2026; however, contributions cannot be made until July 4, 2026. The accounts can be opened by parents or guardians on behalf of their children.
If you have questions about Trump Accounts, we suggest contacting your legal counsel and financial planner.