The 2025 tax legislation created a new type of tax-advantaged account for children known as a Trump Account. Contributions to these accounts began July 4, 2026, and parents and grandparents should understand both the potential benefits and the significant restrictions.
Although frequently described as a new children’s savings account, a Trump Account is actually a special type of traditional Individual Retirement Account (IRA) governed by Internal Revenue Code §530A. Special rules apply until the year the child reaches age 18.
Who Qualifies for a Trump Account?
One may generally establish a Trump Account for a child if:
- The child has not reached age 18 before the end of the year when you make the election; and
- The Social Security Administration has issued a valid Social Security number to the child.
Importantly, you can contribute to the account even if the child has no wages or other earned income. This is a significant difference from the normal rules applicable to traditional and Roth IRAs.
The child owns the account and is the beneficiary.
An authorized person must elect to establish the account. Depending upon the circumstances, this may include a legal guardian, parent, adult sibling, or grandparent. An authorized person submits the election on IRS Form 4547, Trump Account Election(s), and the IRS now permits submitting it through an IRS Individual Online Account.
The Government’s $1,000 Contribution
Some confusion remains about the government’s $1,000 contribution. Not every child who qualifies for a Trump Account qualifies for the $1,000 government contribution.
The one-time $1,000 Treasury contribution is available under the pilot program for a child who:
- Is a U.S. citizen;
- Was born between January 1, 2025 and December 31, 2028;
- Has a valid Social Security number; and
- Has not previously received the pilot-program contribution.
You must elect to receive the $1,000 contribution.
Thus, an older child may qualify to have a Trump Account even though that child does not qualify for the government’s $1,000 initial contribution.
The $1,000 government contribution does not count against the normal annual contribution limitation.
How much can one contribute?
In 2026 and 2027, individuals and employers may contribute up to $5,000 per year to a Trump Account in total. The $5,000 limitation is scheduled to be adjusted for inflation after 2027.
Other people besides parents may contribute. Contributions may come from the child, parents, grandparents and other individuals.
The $5,000 limitation excludes certain contributions, including:
- The government’s $1,000 pilot-program contribution;
- Certain qualified general contributions made through Treasury and funded by governmental entities or qualifying nonprofit organizations; and
- Qualified rollovers from another Trump Account.
Again, the child does not need earned income to receive the contribution.
Can an Employer Contribute?
Yes. An employer may establish a qualifying Trump Account contribution program and contribute toward an employee’s Trump Account or the Trump Account of an employee’s dependent.
The plan caps the employer contribution exclusion at $2,500 per employee for 2026 and 2027, with inflation adjustments thereafter. The plan generally excludes employer contributions from the employee’s taxable income.
However, the employer contribution counts toward the overall $5,000 annual contribution limitation. For example, if an employer contributes $2,500, sources subject to the $5,000 limitation can contribute only another $2,500.
Treasury and the IRS have issued proposed regulations governing these employer programs, including written-plan and nondiscrimination requirements.
Is There an Income-Tax Deduction for Contributions?
Generally, no.
Unlike a deductible traditional IRA contribution, an individual does not receive an income-tax deduction under IRC §219 for contributing money to a child’s Trump Account.
However, contributions made personally by family members and others generally create tax basis in the account. By contrast, the government’s $1,000 contribution, qualified general contributions, and qualifying employer contributions do not create basis.
Distributions from the account make that distinction important.
How do we invest money?
Congress placed substantial investment restrictions on Trump Accounts while the child is under age 18.
During this growth period, investors must generally invest the money in qualifying mutual funds or ETFs that track an index composed primarily of U.S. companies.
Under current guidance and proposed regulations, qualifying investments generally must:
- Track an appropriate U.S. equity index, such as the S&P 500;
- Not use leverage; and
- Have annual fees and expenses of no more than 0.10% of the investment balance.
The purpose is essentially to provide a relatively low-cost, diversified investment structure rather than allowing individual stock picking or speculative investments within the account. Treasury and the IRS issued additional proposed regulations concerning these investment requirements in August 2026.
Can the Child Withdraw the Money Before Age 18?
Generally, no.
This is one of the most important limitations of a Trump Account.
The policy prohibits distributions during the growth period. Limited exceptions exist for correcting excess contributions, a trustee-to-trustee rollover to another Trump Account, certain transfers to an ABLE account during the year the child turns 17, and distributions following the beneficiary’s death.
Consequently, parents should not view a Trump Account as an ordinary savings account available for childhood expenses. Once money is contributed, access to it is quite restricted until the growth period ends.
What Happens When the Child Turns 18?
Beginning January 1 of the calendar year in which the beneficiary turns 18, most of the special Trump Account restrictions cease to apply, and the account generally becomes subject to the rules applicable to a traditional IRA.
That does not mean that an 18-year-old can simply withdraw the entire account tax-free.
Traditional IRA distribution rules generally apply. To the extent a distribution represents taxable amounts rather than the beneficiary’s basis, it may be subject to income tax. In addition, distributions before age 59½ may generally be subject to the 10% additional tax on early distributions unless an exception applies.
Existing IRA exceptions may therefore become important. For example, exceptions to the 10% additional tax may apply in certain circumstances for qualified higher-education expenses or qualifying first-time home-buyer distributions.
What About Grandparents Making Contributions?
Grandparents and other family members may contribute, subject to the applicable contribution limits.
There was initially concern that contributions to a Trump Account might constitute gifts of a future interest, potentially creating unnecessary gift-tax-return filing requirements.
The IRS addressed that issue in Revenue Procedure 2026-25, which provides a safe harbor for qualifying contributions. When the procedure’s requirements are met, Revenue Procedure 2026-25 treats qualifying Trump Account contributions as completed gifts that qualify for the annual gift-tax exclusion and do not, by themselves, require the donor to file a federal gift tax return.
For 2026, the annual gift-tax exclusion is $19,000 per recipient, although the Trump Account itself remains subject to its separate $5,000 annual contribution limitation for ordinary contributions.
Trump Account vs. 529 Plan
Families should recognize that a Trump Account and a 529 education savings plan serve different purposes.
A 529 plan provides tax-favored funds for qualified education expenses. A Trump Account, on the other hand, begins as a specially restricted IRA and ultimately becomes subject largely to traditional IRA rules.
Accordingly, establishing a Trump Account does not necessarily mean that parents or grandparents should discontinue funding an existing 529 plan. Depending upon the family’s objectives, the two accounts may complement one another.
Important Points to Remember
Eligibility for an account and eligibility for the $1,000 government contribution are different. A child under 18 with a Social Security number may qualify for an account even though the child was not born during 2025–2028.
The account has no earned-income requirement during the growth period. This makes the account available to young children who obviously have no employment income.
The program generally caps ordinary contributions at $5,000 annually for 2026 and 2027. The limit excludes certain government, nonprofit, and rollover contributions.
Personal contributions are not deductible. The main tax advantage is the investment’s tax-deferred growth.
You generally cannot access the money before age 18.
Investment choices are deliberately limited during the growth period to qualifying low-cost U.S. stock-index funds.
After the special growth period ends, traditional IRA rules generally take over. Therefore, a young adult’s withdrawals can have income-tax and early-distribution-tax consequences.
How to Establish an Account
The election to establish a Trump Account is made using Form 4547, Trump Account Election(s). Eligible families may also use the form to elect the government’s one-time $1,000 pilot-program contribution.
The IRS currently permits taxpayers to submit the election through their IRS Individual Online Account.
New Temporary Regulations
The IRS issued temporary regulations that became effective on September 30, 2025. They will now open Trump accounts automatically beginning October 1, 2026. The purpose is to make these special accounts available for children early to maximize the growth periods of the accounts. The growth period ends December 31 of the year in which the child turns 17.
Around October 1, 2026, the IRS will elect to establish an “auto account” for each eligible child with a Social Security number for whom no one has already opened a Trump account. In future years, the IRS will make the election for children who later become eligible for the account.
These automatic accounts require a guardian, legal custodian, or beneficiary to claim the account so they can control it. That person must verify their identity and authority to receive the beneficiary’s return information. Once done, the balance in the automatic account will transfer to a claimed Trump account.
The Bottom Line
Trump Accounts give parents, grandparents, and employers a new opportunity to start building long-term assets for a child at a very young age. The combination of tax-deferred investment growth, no earned-income requirement, potential employer contributions, and, for qualifying children, the government’s $1,000 initial contribution can make the account worth considering.
At the same time, this is not simply a tax-free children’s savings account. Contributions by individuals are not deductible, investment choices are restricted while the child is young, withdrawals generally are prohibited before age 18, and traditional IRA taxation rules largely apply afterward.
Families considering a Trump Account should evaluate it as part of their overall savings strategy, particularly alongside existing vehicles such as 529 education plans, Roth IRAs when the child eventually has earned income, and other family investment accounts.
This article provides general tax information and is not intended as tax, investment or legal advice for any particular taxpayer. Treasury and the IRS continue to issue guidance and proposed regulations concerning Trump Accounts, and you should review the rules when establishing or funding an account.