What Are Trump Accounts? A New Way to Save for Your Child

If you've been hearing about the new 'Trump Accounts' and wondering what they actually are, you're not alone.
 
The name has generated plenty of headlines, but underneath those headlines is a new type of investment account designed to help families begin building wealth for children at an early age.
 
So what exactly are these accounts - and should your family use one?

The Basics

Beginning July 4, 2026, families can fund a Trump Account (created under Internal Revenue Code Section 530A) for children under age 18. Accounts are opened by filing Form 4547. There are three ways you can file Form 4547:

1. Filling out the form when filing your tax return (there is no April 15^th deadline for this filing)
2. Filling out the form within the Trump Accounts app via your phone
3. Filling out the form on the IRS website via an individual’s online account

It normally takes a few days for the IRS to approve Form 4547. Once approved, you will get an email saying it’s time to activate the account. You can click the link in the email to activate the account, or you should be able to activate at trumpaccount.com. The account allows money to be invested in low-cost U.S. stock index funds, with the goal of helping children build long-term wealth. Children born between January 1, 2025, and December 31, 2028, may receive a one-time $1,000 government contribution after an account is opened. Families can also contribute up to $5,000 annually through direct contributions (which aren’t tax deductible), while employers can contribute $2,500 annually per employee (subject to the $5,000 direct contribution limit). The “life” of a Trump Account is split up into two phases: the “growth period” and the “post-growth period”. 

The Growth Period

During the growth period, contributions can be made, but distributions are generally not allowed. The growth period ends on December 31^st of the year before the beneficiary turns 18. Or, to say it another way, if the beneficiary is 17 on December 31^st of a given year, Jan 1^st of that next year means that you are now out of the growth period. During the growth period, direct contributions (and also employer contributions) can be made into the account. Anyone can make direct contributions into a beneficiary’s plan, but the limit is $5,000/year/beneficiary ($2,500/year for employer contributions per employee, not per dependent). The contribution deadline for each year is December 31 (unlike the rules around IRA/HSA contributions). Also, during this time, there is a contribution category known as Qualified General Contributions. The rules are complex enough that they deserve their own discussion, so I won't cover all the details here. However, one provision is worth highlighting: families with children age 10 and under living in ZIP codes with median incomes below $150,000 may be eligible for a $250 contribution to their child's Trump Account through a grant from the Dell Foundation. This is important to note for those with kids who may not qualify for the $1,000 initial seed funding, but could qualify for some money via the Dell Foundation donation. 

The Post-Growth Period

Upon reaching age 18, the beneficiary takes control of the Trump Account. At this time, for all intents and purposes, it is an IRA in the beneficiary’s name. It will follow all the rules for Traditional IRA accounts. 

Think of It as a Retirement Account That Starts at Birth

Imagine opening a retirement account for your child the day they're born. The money grows tax-deferred while invested in broad stock market index funds. Based on the tax treatment and rules around this account, it is intended for long-term wealth building rather than short-term expenses like college or a first car.

Some Key Considerations

Trump Accounts can be an excellent way to help your child get a leg up in life, but there are a couple of things to note. 

• Some states plan to tax annual earnings in Trump Accounts
• Currently, these states are California, Hawaii, Kentucky, Massachusetts, Pennsylvania, South Carolina, and Wisconsin as of July 2026
• In the year when the child turns 18, the account is now controlled by the beneficiary. They will ultimately get to decide what they want to do with the money.
• When doing Roth Conversions, be careful of the impact of the Kiddie Tax* if your child is 18 years old with earned income less than ½ of their support OR they are 19-24 and a full-time student with earned income less than ½ their support.

*Kiddie tax is a tax treatment where, if the above rules apply, unearned income above $2,700 (for tax year 2026) will be taxed at the parent’s tax rate (usually much higher) instead of the child’s tax rate (usually much lower).

• The taxation of the earnings can be quite complicated.
• Direct contributions are treated as after-tax contributions
• Excluded contributions (such as employer contributions or the initial $1,000 funding contribution) are treated as pre-tax
• When making a distribution, they are treated as pro-rata (meaning a split between pre- and after-tax dollars).
• This means that you need to track your basis in the account: knowing how much you have contributed directly (so you don’t get taxed on those dollars when you withdraw) and how much your employer or the government has contributed (so you pay taxes appropriately)

So... Should I Open One?

Think of a Trump Account as just another tool within your financial tool belt. To start with, if your child is eligible for the $1,000 initial funding (or for qualified general contributions such as the one being made by the Dell Foundation), yes, you should open the account and take the “free money”. After that, you need to narrow in on your goals. Are you wanting to help super charge a Roth IRA for your child’s future retirement? Are you wanting to help with college costs? Or maybe you want to help them with being able to buy a first time house? Your answer to those questions will impact where you save your next dollar. With that being said, below will give you a general idea of what account type is the best to save into based on your goal.

Goal: College

Best Account: 529 Plan

Why: Tax-free growth; and tax-free withdrawals for qualified education expenses.

Goal: First Car, Wedding, Business, Home Down Payment

Best Account: UTMA / UGMA

Why: Flexible use once the child reaches adulthood.

Goal: Long-term Retirement

Best Account: Trump Account (most likely converted to Roth when eligible)

Why: Designed for decades of investment growth.

The Bottom Line

Trump Accounts provide another tool for helping children build wealth over time. They are not a replacement for every other savings strategy, but they may be a valuable addition for families focused on long-term investing.

Trump Account Opening Checklist

Thinking about opening a Trump Account? Use our free checklist to confirm eligibility, gather the information you'll need, activate the account, choose investments, and review additional funding opportunities.

Download the Trump Account Opening Checklist

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