Table of Contents
Key Summary
Trump accounts are 530A tax-advantaged IRAs for children under 18 with no earned income requirement, authorized under the One Big Beautiful Bill Act signed in 2025 The federal government will contribute one-time $1,000 for children born January 1, 2025 through December 31, 2028 Annual contribution limits include $5,000 aggregate from all individual contributors, $2,500 from employer programs tax-free to employees, and unlimited qualified general contributions from government or charitable entities Contributions begin July 4, 2026 after filing Form 4547 with 2025 tax return, with online portal launching mid-2026 No withdrawals allowed before age 18 except disability. After 18, 10% penalty applies before age 59½ unless qualified exceptions are met
A new financial planning tool is launching in 2026 for American families, the Trump account, officially known as a 530A account. Authorized under the One Big Beautiful Bill Act signed into law on July 4, 2025, Trump accounts are tax-advantaged individual retirement accounts specifically designed for children under age 18.
The Treasury Department and IRS are currently finalizing the administrative and regulatory framework to implement these accounts, with initial guidance released in December 2025. The full program launches July 4, 2026, when parents can begin contributing to help their children build long-term financial security.
Trump accounts offer unique benefits not available with other child savings vehicles. The federal government will contribute $1,000 to accounts opened for children born between January 1, 2025, and December 31, 2028. Employers can contribute up to $2,500 annually tax-free for employees' children. Parents and others can contribute up to $5,000 per year per child regardless of whether the child has earned income.
These contributions grow tax-deferred until withdrawal, potentially creating substantial nest eggs by the time children reach adulthood. Here's everything you must know about Trump accounts:
What is a Trump account
A Trump account is a specialized traditional IRA established exclusively for the benefit of a child under age 18, authorized under Section 530A of the Internal Revenue Code. The account must be designated as a Trump account when opened and can only be established once per eligible child.
Eligibility requirements
To open a Trump account, the child must have a valid Social Security number, be a U.S. citizen, and be under age 18 on December 31 of the year the account is opened.
Important: Each child may have only one Trump account. Once established, the account stays with the child through adulthood.
How to open a Trump account
Parents or legal guardians will be able to open Trump accounts using two methods once the program launches:
Method 1 - Form 4547 with your 2025 tax return (recommended): File IRS Form 4547 when submitting your 2025 federal tax return (filed in 2026). This is expected to be the fastest method to establish the account and claim the $1,000 pilot program contribution for eligible children.
Method 2 - Online portal: Use the online portal at trumpaccounts.gov, which is expected to be fully functional by mid-2026. This method will be available for families who already filed their 2025 returns or prefer to wait for the simplified online process.
Why file Form 4547 with your tax return: Filing Form 4547 with your 2025 return ensures your account is established before contributions begin in July 2026. This allows you to immediately start investing once the contribution period opens.
Form 4547 details
Form 4547 includes two separate elections—one to open the Trump account and one to receive the $1,000 pilot program contribution from the Treasury Department. The form accommodates up to two children. Families with more than two eligible children can file multiple Form 4547s.
The $1,000 government seed contribution
The federal government will contribute $1,000 to Trump accounts opened for children born between January 1, 2025, and December 31, 2028. This is a one-time contribution that doesn't count against the $5,000 annual contribution limit.
Key details about the pilot program contribution:
- The $1,000 is contributed on a pre-tax basis, meaning it's not taxed when deposited but will be fully taxable upon withdrawal
- The contribution is automatic once you elect to receive it on Form 4547
- Children born outside the 2025-2028 window can still open Trump accounts but won't receive the $1,000 seed money
Why this matters: A $1,000 investment at birth growing at 7% annually could be worth approximately $17,000 by age 18 and over $57,000 by age 60—all from a single government contribution.
Contribution rules and limits
Trump accounts have specific contribution rules that differ from traditional IRAs and other retirement accounts.
Annual contribution limits
- Individuals (parents, grandparents, friends): Up to $5,000 per child per year combined from all individual contributors
- Employers: Up to $2,500 per child per year through employer Trump account contribution programs
- Government and charitable entities: Additional contributions through qualified general contribution programs that don't count against the $5,000 limit
Total possible contributions: Up to $5,000 from individuals plus $2,500 from employers plus unlimited qualified general contributions equals potentially $7,500+ annually per child.
Important notes:
- The $5,000 individual limit is aggregate—not per person. If grandparents contribute $3,000, parents can only contribute $2,000 to stay within the limit
- Contribution limits are indexed for inflation starting in 2027
- Contributions cannot be made before July 4, 2026
No earned income requirement
Unlike traditional and Roth IRAs, Trump accounts don't require the child to have earned income. Parents can contribute the full $5,000 even for newborns with no wages or self-employment income.
Employer contributions
Employers can establish Trump account contribution programs allowing them to contribute up to $2,500 annually to accounts for employees or their employees' dependents. These employer contributions are excluded from the employee's gross income—meaning no tax is due on the contribution.
Why this is valuable: An employer contributing $2,500 annually for 18 years at 7% growth creates approximately $92,000 in the child's account by age 18—all tax-deferred.
No impact on other IRA contributions
Trump account contributions don't reduce how much children can contribute to traditional or Roth IRAs once they have earned income. A teenager with a part-time job can receive $5,000 in Trump account contributions and separately contribute up to $7,000 (2026 IRA limit) to a traditional or Roth IRA based on their own earned income.
Investment restrictions during the growth period
Trump accounts have strict investment rules during the "growth period"—the time before the child turns 18.
Eligible investments
Trump account funds must be invested in mutual funds or ETFs that track an index of primarily U.S. companies, don't use leverage, and have annual expenses of 0.1% or less.
Examples of eligible investments: S&P 500 index funds, total U.S. stock market index funds, Russell 3000 index funds, and similar broad-based U.S. equity index funds with low expense ratios.
Prohibited investments: Industry or sector-specific index funds (technology, healthcare, energy sectors), cash or money market funds, international stock funds, bond funds, and individual stocks or bonds.
Why these restrictions exist: The law requires Trump accounts to be invested in diversified, low-cost U.S. stock market index funds to maximize long-term growth while keeping fees minimal.
Tax treatment of contributions and withdrawals
Understanding the tax treatment of Trump accounts is critical for planning.
Tax treatment of contributions
- Individual contributions (parents, grandparents, others): Made with after-tax dollars and are not tax-deductible. These contributions have already been taxed and won't be taxed again upon withdrawal
- Employer contributions: Made on a pre-tax basis and excluded from the employee's taxable income. These contributions will be fully taxable upon withdrawal
- Government contributions: Made on a pre-tax basis. The $1,000 pilot program contribution will be fully taxable upon withdrawal
Tax treatment of withdrawals
- After-tax contributions: Withdrawn tax-free since taxes were already paid
- Pre-tax contributions and all earnings: Taxed as ordinary income upon withdrawal at the beneficiary's tax rate at the time of withdrawal
Example: Your child's Trump account contains $10,000 in after-tax contributions you made, $2,500 in employer contributions, $1,000 government seed contribution, and $15,000 in investment earnings. Total account value is $28,500. Upon withdrawal, $10,000 is tax-free and $18,500 is taxable as ordinary income.
Withdrawal rules and penalties
Trump accounts have strict withdrawal rules during the growth period and transition to traditional IRA rules after age 18.
During the growth period (before age 18)
Generally, no withdrawals are allowed from Trump accounts during the growth period. Limited exceptions may apply for disability or other qualifying hardships, but final regulatory guidance on exceptions is still being developed by the Treasury Department.
After age 18
Beginning in the year the child turns 18, the Trump account becomes subject to most traditional IRA rules. Withdrawals are allowed but subject to taxation and potential penalties.
Standard withdrawal rules: Withdrawals before age 59½ are subject to a 10% early withdrawal penalty plus ordinary income tax on taxable portions.
Penalty exceptions: The 10% penalty doesn't apply if withdrawals are used for qualified education expenses, first-time home purchase (up to $10,000 lifetime), disability, certain medical expenses, or other traditional IRA exceptions.
Required minimum distributions (RMDs): Trump accounts that remain separate from other traditional IRAs after age 18 are subject to RMD rules beginning at age 73 (current law).
Trump accounts vs 529 plans
Many parents wonder whether Trump accounts replace 529 education savings plans. The answer is no—they serve complementary purposes.
|
Feature |
Trump Account |
529 Plan |
|
Primary purpose |
General long-term savings and retirement |
Education expenses only |
|
Annual contribution limit |
$5,000 (indexed after 2027) |
$19,000 per donor (gift tax limit) |
|
Tax treatment of earnings |
Tax-deferred; taxed as ordinary income upon withdrawal |
Tax-free if used for qualified education expenses |
|
Investment options |
Limited to low-cost U.S. stock index funds |
Broad range including stocks, bonds, age-based portfolios |
|
Withdrawal flexibility |
Any purpose after age 18 (penalties apply before 59½) |
Education only; 10% penalty for non-qualified use |
|
Government seed money |
$1,000 for children born 2025-2028 |
None (some states offer small matching grants) |
|
Employer contributions |
Up to $2,500 annually (tax-free to employee) |
Not available |
When to choose Trump accounts
Trump accounts make sense when you want long-term flexible savings beyond education, want to capture the $1,000 government seed money, have access to employer contributions, prefer simple low-cost index fund investing, or have maxed out 529 contributions.
When to choose 529 plans
529 plans remain superior for education savings when you're confident funds will be used for qualified education expenses, want tax-free growth for education, want higher contribution limits, or want broader investment options including age-based portfolios.
Best approach for many families: Use both. Contribute to 529 plans for education goals and Trump accounts for long-term wealth building and retirement savings.
Action steps for 2026
Step 1 - File Form 4547 with your 2025 tax return: Include Form 4547 when filing your 2025 federal tax return (due April 15, 2026, with extensions to October 15, 2026). This establishes the Trump account and secures the $1,000 pilot program contribution for eligible children.
Step 2 - Choose a custodian: Select a financial institution to serve as custodian for the Trump account. Major brokerages including Vanguard, Fidelity, Schwab, and others are expected to offer Trump accounts once the program fully launches. Consider fees, customer service, and available index fund options meeting the investment restrictions.
Step 3 - Prepare to contribute starting July 4, 2026: Once the contribution period opens on July 4, 2026, make your first contribution. Consider contributing the full $5,000 early in the year to maximize time in the market.
Step 4 - Check employer programs: Ask your HR department if your employer plans to offer a Trump account contribution program. If so, enroll to receive the additional $2,500 annual employer contribution.
Step 5 - Integrate with overall financial planning: Consider Trump accounts as part of your comprehensive plan including 529 plans, your own retirement accounts, life insurance, and other savings goals.
How NSKT Global helps with Trump account planning
NSKT Global provides comprehensive tax and financial planning services for families establishing Trump accounts and coordinating them with overall wealth building strategies.
Our Trump account services include Form 4547 preparation and filing with your 2025 tax return ensuring you establish accounts and claim the $1,000 pilot program contribution, contribution planning and coordination calculating optimal contribution amounts between Trump accounts, 529 plans, and other savings vehicles based on your family's goals. We also help with tax planning for contributions and withdrawals, analyzing the tax implications of employer contributions, pre-tax vs after-tax contributions, and withdrawal timing, and custodian selection guidance helping you choose the best financial institution for your Trump account.
We also provide ongoing account management and compliance monitoring to ensure contributions stay within annual limits, investments comply with eligible investment restrictions, and withdrawals are structured to minimize taxes and penalties. We offer integration with estate and education planning, coordinating Trump accounts with 529 plans, UGMA/UTMA accounts, trusts, and other family wealth transfer strategies.
Whether you're establishing Trump accounts for newborns, coordinating multiple child savings vehicles, or planning withdrawal strategies as children approach age 18, NSKT Global provides the expertise to maximize the benefits of this new savings tool while ensuring full compliance with IRS requirements.
People Also Ask
Can I open a Trump account for a child born before January 1, 2025?
Yes, any child under age 18 can have a Trump account opened for them. However, only children born between January 1, 2025, and December 31, 2028, qualify for the $1,000 federal seed contribution.
What happens to my child's Trump account if we move out of the United States?
The account remains active, but your child must maintain U.S. citizenship. If citizenship is renounced, final regulations will determine whether the account must be liquidated or can remain until age 18 with no new contributions.
Can grandparents open a Trump account for their grandchild without parental involvement?
No. Only parents or legal guardians can establish Trump accounts for children. However, once opened, grandparents and others can contribute toward the $5,000 annual individual limit with parental coordination.
What happens if I contribute more than $5,000 to my child's Trump account in one year?
Excess contributions are subject to a 6% excise tax annually until removed. You must file Form 5329 with your tax return and withdraw the excess plus earnings to avoid ongoing penalties.
Can my child have both a Trump account and a custodial Roth IRA?
Yes, but the Roth IRA requires the child to have earned income. Trump accounts have no earned income requirement. Once your child has wages, they can contribute to both accounts up to their respective limits.
