Understanding Trump Accounts
By Mike Cona on June 1, 2026
In the summer of 2025, with the passing of the Big Beautiful Bill, a new account type was created in order to help parents save for children under 18, the “Trump Account”. While this new account shares some characteristics with accounts that existed before, it also has some unique qualities that could make it useful in giving kids a head start towards saving for retirement or other longer-term goals. Let’s take a look…
What is it and who’s eligible?
Trump accounts are a new variety of tax-deferred investment account that parents can open for children who will be under 18 when the calendar year ends. It is similar in some ways to a Traditional IRA, yet with some important distinctions. Although parents can register their children for these accounts now, additional details and funding will not be available until July of 2026. One added bonus for children born between 2025 and 2028 is that the US Treasury will get the account started with a $1,000 initial contribution.
How do contributions work?
Individuals can contribute up to a maximum of $5,000 each year until the beneficiary turns 18. These contributions can come from parents, grandparents, other family and friends; however, $5,000 is the maximum the account can receive from those sources in any one year. Employers can contribute up to $2,500 per year to the account of an employee’s child; however, the IRS has not yet clarified if employer contributions count towards the annual $5,000 maximum. In certain cases, governments and charities can also contribute to these accounts, and their contributions would not count against the $5,000 limit.
Where will the funds be held?
The US Treasury will set up and administer these accounts at first, although we expect rollovers to other financial institutions to be available in the near future. When the list of participating financial institutions grows, we expect more investment options to become available.
What are the investment options?
Funds held in these accounts can be invested in eligible mutual funds or exchange-traded funds that track a major market index. While the available list of investment options may not be extensive at first, the use of index funds can allow for diversification and help to keep portfolio expenses low over time.
How is it taxed?
Parent and family contributions to these accounts are not Federal or State tax deductible; however, certain contributions made by an employer, a charity, or the government may be made with pre-tax dollars by that organization. Any earnings of the account will grow tax-deferred. Once the child turns 18, the entire account would need to be turned over to them. From then on, it would function like a Traditional IRA, with the same tax treatment and rules on withdrawals. It could also be converted to a Roth IRA; with income tax owed only on the growth and not the original contributions.
How do I get started?
Although contributions to these accounts can’t be made until July of 2026, parents can register their minor children now either by submitting form 4547 when they file their income taxes, or by going to the trumpaccounts.gov website and filling out the online submission form and following the on-screen steps.
Is this right for my situation?
While there are some unique features of these new accounts that could allow parents to give their children a head start on long-term retirement savings, there are other account types available for children that may be a better fit for your specific situation. If you’d like to know more, please reach out to schedule a time to discuss your options so that together we can determine what best helps your family accomplish your goals