One of the provisions introduced in the Big Beautiful Bill is the Trump Account. We’ve received several questions about what this is and how individuals can participate. As is often the case with new benefits, it takes time for the IRS or other agencies to establish implementation guidelines. Here’s what we know so far.

What Is a Trump Account?

Trump Accounts are long-term, tax-advantaged savings accounts created specifically for children under 18 years old. They are legally structured as IRA-style accounts and generally follow federal rules for traditional (non-Roth) IRAs once the child reaches adulthood.

The policy goal is to:

• Give every eligible child a head start on retirement savings
• Encourage contributions from parents, grandparents, and even employers over the years

Who Is Eligible and When Do These Accounts Start?

Eligibility

A Trump Account can be opened for a child who:

• Is under age 18 at the end of the calendar year
• Has a valid Social Security number

Parents or legal guardians will open and manage the account on the child’s behalf while the child is a minor.

Start Date

The law authorizes the Trump Account beginning in 2026. Contributions are expected to start on July 4, 2026, with nationwide availability anticipated by January 1, 2026 (or shortly thereafter), subject to Treasury implementation.

The U.S. Department of the Treasury will oversee the program and either hold the accounts directly or approve private institutions—such as banks, brokers, and recordkeepers—to offer them.

The $1,000 Government “Seed” Contribution

One of the most talked-about features of the program is the one-time $1,000 federal deposit for eligible newborns.

• Who qualifies? Children born between 2025 and 2028 who are U.S. citizens and have a Social Security number.
• How does it work? The $1,000 will be deposited into a Trump Account as part of a federal pilot program.
• Does it affect contribution limits? No. This government deposit does not count toward the annual $5,000 contribution limit.

Current guidance suggests that when parents file taxes and claim their child as a new dependent, the Treasury will seed the account in July of that same year. Additional guidance is expected.

How Contributions Work (Before Age 18)

Annual Limits

• Total annual contribution limit: Up to $5,000 per child
• The $1,000 government seed is in addition to this limit

Who Can Contribute?

Family and Individuals

Parents, grandparents, the child, or other individuals may collectively contribute up to $5,000 per year using after-tax dollars.

Employers

A parent’s employer (and later, the child’s employer) may contribute up to $2,500 of the annual limit without it counting as taxable income to the parents. Further details are forthcoming.

Government Entities and Nonprofits

States, local governments, tribal governments, and charities may contribute to qualified groups of children. These contributions do not count toward the $5,000 limit, but must be equal across the group.

Investment Rules While the Child Is Under 18

Investment options are intentionally limited. The account may only hold mutual funds or ETFs that:

• Track a broad U.S. equity index
• Do not use leverage
• Have an expense ratio of 0.10% or less

No Withdrawals Before Age 18

Distributions are not permitted until January 1 of the year the child turns 18, except for limited technical exceptions.

What Happens at Age 18 and Beyond?

At approximately age 18, the Trump Account converts into a traditional IRA owned by the child.

Contribution Rules

Standard traditional IRA rules apply, including earned income requirements and annual limits.

Withdrawals

Withdrawals before age 59½ are generally subject to income tax and a 10% penalty unless an exception applies.

How Are Trump Accounts Taxed?

Family Contributions

Made with after-tax dollars and create a tax basis that is not taxed again when withdrawn.

Employer, Government, and Earnings

Tax-deferred while invested and generally taxed as ordinary income when withdrawn.

Comparison to Other Children’s Accounts

529 Plans

529 plans are education-focused. Trump Accounts are designed for long-term retirement savings and are not limited to education expenses.

UTMA/UGMA Accounts

Custodial accounts are fully accessible at adulthood and taxed annually, while Trump Accounts emphasize tax deferral and long-term restrictions.

Roth IRAs for Kids

Roth IRAs require earned income. Trump Accounts do not, allowing saving from birth.

Potential Advantages and Drawbacks

Advantages

• $1,000 federal seed contribution
• Decades of tax-deferred compounding
• Low-cost, disciplined investing

Drawbacks

• No access before age 18
• Contributions not deductible while the child is a minor
• Several implementation details still pending IRS guidance

Treasury and IRS guidance is ongoing, and additional clarification is expected.