Trump Accounts: Essentially an IRA for Children
The recently passed One Big Beautiful Bill Act introduced Trump Accounts, a new savings vehicle designed for children under age 18. In the bill, a “Trump Account” is defined as “…an individual retirement account as defined in Internal Revenue Code section 408(a) which is not designated as a Roth IRA.”
Who qualifies for a Trump Account?
Under the law, a child born after December 31, 2024, and before January 1, 2029, may have a Trump Account established on their behalf. Each eligible child will receive an initial $1,000 government-funded deposit. To qualify, the child need only have a Social Security number.
Children born before January 1, 2025, who are still under age 18 and are US citizens are also eligible for a Trump Account with the same features—with one major exception: they will not receive the $1,000 government seed deposit. These children may be eligible for contributions from other donors who have pledged to fund newly opened accounts.
How does funding a Trump Account work?
Children can receive up to $5,000/year in their account (not including any contributions from governments or charities). The contributions can come directly from parents, grandparents, other family members, or essentially any other individual. Employers may also contribute up to $2,500 per year to an employee’s managed accounts. The $2,500 limit is on an employee basis, so an employee with multiple children could not receive more total funds than an employee with one child. Any contributions go toward the child’s $5,000 annual cap. Employer contributions are excluded from the employee’s taxable income, creating an additional incentive for participation.
As of July 4, 2026 anyone who applied for an account by filing form 4547 with their tax return should be able to begin making contributions. If a taxpayer still needs to apply for their account(s), it can be done at any time by filing Form 4547 through their IRS.gov account, or through the Trump Account mobile app. Bank of New York Mellon (BNY) has been selected as financial agent to support the accounts, and BNY has partnered with Robinhood to serve as brokerage and initial trustee.
Contributions must be invested in one of five available low-cost stock mutual funds or ETFs that mirror broad U.S. equity indexes, such as the S&P 500. Outside of rare exceptions, funds cannot be withdrawn before January 1 of the year in which the child reaches age 18, at which point the account is treated like a traditional IRA and follows the same distribution, taxation, and penalty rules.
All direct, non-employer contributions are made with after-tax dollars, meaning those funds are not taxed again upon withdrawal. However, earnings on all contributions will be taxed as ordinary income.
Who should fund a Trump account?
Here’s the practical issue: most families already face two massive competing financial goals—paying for college and saving for retirement. With college costs soaring, even diligent savers often struggle to fully fund tax-free 529 college savings plans. For many households, finding additional dollars to contribute to a Trump Account will be unrealistic.
In practice, this means the wealthiest families—those already on track with college and retirement funding, or financially secure grandparents—will be the primary beneficiaries of this new account’s tax-deferral opportunity.
For most families choosing between funding a 529 plan or a Trump Account, the 529 plan will remain the better choice. Education costs are near-term, unavoidable, and grow faster than inflation. And while Trump Account funds could later be used to repay student loan debt, under current law, such distributions before age 59½ will be subject to ordinary income tax and penalty (with the same exceptions as traditional IRAs). Still, taking advantage of the $1,000 federal seed contribution makes sense—that may truly be the only “free” part of the Trump Account.
