Trump Accounts are the newest kid on the block in the world of savings accounts for children. They were created under the Working Families Tax Cuts (Section 70204), and yes, they come with a lot of rules, deadlines, and fine print.
If you’re looking for the latest on what Trump Accounts are and how to open one for your kids, this guide is for you. We will break down what the account is, who qualifies, when funding can start, and what you actually need to do to open one.
What are Trump Accounts?
A Trump Account is a new, tax-advantaged investment account established for a child’s exclusive benefit. In many ways, it is treated like a traditional IRA after the child reaches adulthood, but it has special rules while the child is under 18.
The intent is simple. Give families a structured way to invest in a child’s name in low-cost, U.S. stock index-based funds, with guardrails on withdrawals while the child is growing up.
Who can have a Trump Account?
A Trump Account is available for eligible children who meet key requirements, including having a valid Social Security number and being under age 18 at the time of the election to establish the account. Additional rules apply for children who qualify for the federal pilot contribution.
When Trump Accounts can be funded
Trump Accounts cannot be funded before July 4, 2026. That is an important start date for everyone, including families, employers, and the federal pilot contribution.
How Trump Accounts are funded
Trump Accounts can be funded in a few different ways.
Federal $1,000 pilot contribution: The federal government will make a one-time $1,000 contribution to eligible children. The pilot contribution is tied to specific eligibility rules, which include being born between 1/1/2025 and 12/31/2028.
Individual contributions: Parents, guardians, and other individuals can contribute, subject to annual limits during the child’s growth period. Under current guidance, authorized contributions from individuals and employers are allowed up to $5,000 per year in total.
Employer contributions: Employers can also contribute through an employer program. A key feature is that employers can contribute up to $2,500 per year toward an employee’s or dependent’s Trump Account without it counting as taxable income to the employee, subject to program rules and annual indexing after 2027. This is called a nontaxable fringe benefit.
How the money must be invested
Trump Accounts are not open-ended brokerage accounts. The funds must be invested in certain mutual funds or exchange-traded funds that track a U.S. stock index such as the S&P 500, with restrictions designed to keep costs low and prevent complex or leveraged strategies.
Withdrawal rules for Trump Accounts
Trump Accounts are intended to be long-term savings vehicles.
Before age 18: Generally, money cannot be withdrawn before the year the child turns 18. There are limited exceptions in the guidance for situations such as certain administrative corrections or the beneficiary’s death. It should be noted that an early withdrawal would be subject to the same penalties as an IRA.
After age 18: After the growth period ends, the account is generally treated like a traditional IRA with similar tax rules. That means your contributions are not taxable upon withdrawal; only the earnings are.
How to open a Trump Account
Opening a Trump Account starts with an election to establish the account for a child and coordinating with an approved trustee.
Step 1: Confirm the child’s eligibility: Before you do anything else, confirm the child has a valid Social Security number and meets the age requirement for the year you are making the election. If you are seeking the federal $1,000 pilot contribution, confirm the child meets the pilot eligibility rules.
Step 2: Identify the authorized individual: In many cases, this will be the parent or legal guardian. In some cases, another close family member may be eligible to open the account, depending on the IRS priority rules.
Step 3: Choose a trustee: Trump Accounts must be established with an approved trustee. This may be a bank or an IRS-approved nonbank trustee, depending on how providers roll out their programs. It should be noted that the Treasury is initially opening all accounts for those who apply.
Step 4: Make the election to establish the account: The IRS has provided a dedicated election process, including IRS Form 4547, Trump Account Election(s). The election is where you establish the account and, if applicable, request the federal pilot contribution. This can also be included with your 2025 tax return, or the form can be completed separately and mailed/faxed to the IRS.
Step 5: Fund the account after July 4, 2026: Once the account is established, contributions can begin on or after July 4, 2026. Families should track annual contribution limits, and employers should confirm whether they are contributing through a compliant employer program.
Trump Accounts – Are They Your Best Option?
If your child qualifies, it can make sense to open a Trump Account to capture the one-time $1,000 federal contribution. But for most families, a 529 plan should be the first choice. One reason is flexibility: up to $35,000 in a 529 can be rolled into a Roth IRA tax-free if certain requirements are met. Our approach: take the free money, fund the 529 to your comfort level, then consider a Trump Account as a secondary option.
If you want to open a Trump Account for kids, start by organizing the basics: the child’s SSN, confirming who will be the authorized individual for the election, and watching for trustee availability and additional IRS guidance as implementation ramps up in 2026.
Need to talk brass tacks about setting up a Trump Account for kids, contribution limits, or how this fits into your family’s bigger tax plan? Reach out to CPA Nerds, and we will help you take the first steps.
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