Trump Accounts

What Are Trump Accounts?

Tax-advantage savings account for children under eighteen like a hybrid between a Roth IRA and Traditional IRA. It was designed to help families invest in their kids’ future.

What was the Purpose?

The goals are simple: build financial literacy from day one, help families with newborns and young children start saving, provide a straightforward way to invest for kids, and let children own a small slice of U.S. companies early so they can watch compounding do its work.

Who can open one and when?

Any child under eighteen can have a Trump Account, however only one account is allowed per child. Accounts cannot be funded until July 4th, 2026. Account must be directly opened with the U.S. Treasury, not through private firms.

Children born from 2025 through 2028 will receive a $1,000 government contribution. Timing and deposits are still to be finalized.

How much may you contribute?

Families will be able to contribute up to $5,000 per child per year, using after-tax dollars. Entities such as employers and charitable organizations may also contribute to these accounts. These contributions are considered pre-tax amounts. There are no income phase-outs and no earned-income requirements for eligibility to contribute.

How are the investments managed?

Investments are limited to low-fee index mutual funds or ETFs that track U.S. companies with expense ratios capped at 0.10% or 10 basis points.

When can the money be used?

No withdrawals are allowed before the year the child turns eighteen. Starting that year funds may be used for any purpose, but taxation follows IRA style rules. After tax family contribution comes out tax and penalty free. Pretax amounts (employer/ charity contributions) are taxable and may face a 10% penalty.

Who Owns the Account?

The child is the owner; a parent or other family member may serve as custodian.

How is this different from Roth IRA and 529 Plans?

Contributions (how you put money in)

All three use aftertax dollars (no federal deduction for contributions).

1. Roth IRA: Contributions are aftertax.
2. 529: Contributions are aftertax; growth is taxdeferred and taxfree if used for qualified education costs.
3. Trump Account: Family contributions are aftertax; some contributions (e.g., employer program dollars and the government seed) are treated as pretax amounts inside the account.

Who may contribute?

1. Roth IRA (custodial for a minor): The child must have earned income (W-2 wages or properly documented selfemployment like babysitting/lawn care/dog walking; gifts/allowance do not count). 2026 limit: lesser of $7,500 or the child’s earned income for the year.
2. 529 plan: Anyone can contribute, but gifts are subject to the federal gifttax rules. For 2026, the annual exclusion is $19,000 per donor per recipient ($38,000 for a married couple). You can also “superfund” with the fiveyear election: frontload up to $95,000 per donor ($190,000 per married couple) to one beneficiary in a single year and elect to spread it over 5 years on Form 709.
3. Trump Account (for children under 18): Opened by election; family/others can add aftertax dollars (up to $5,000/year, inflationindexed after 2027). Employers may contribute up to $2,500/year (counts toward the $5,000 cap and excluded from the employee’s income). Eligible U.S.citizen newborns (2025–2028) get a onetime $1,000 government seed once elected.

Withdrawals (how money comes out)

Trump Account:

No withdrawals before Jan 1 of the year the child turns eighteen. After that, the account follows Traditional IRAstyle taxation: the aftertax portion is tax and penaltyfree; pretax amounts and earnings are taxable and may face a 10% penalty unless an exception applies.

Roth IRA (minor’s Roth):

1. Qualified withdrawals (after age 59½ and meeting the 5year rule) are taxfree. Contributions can be withdrawn any time tax and penaltyfree; earnings withdrawn early can be taxed/penalized unless an exception applies.
2. Withdrawals are federal taxfree when used for qualified education expenses (tuition/fees/books/supplies/equipment; room & board if at least halftime; up to $10,000/yr for K12 tuition; and $10,000 lifetime for student loan repayment). Nonqualified withdrawals tax the earnings and add a 10% penalty (with exceptions such as scholarships)

Next Steps: How do I open a Trump Account?

1. Add IRS Form 4547 to your 2025 tax checklist. You will make the election for your child on Form 4547, or through the official portal when available.
2. Know who opens the account. After you file Form 4547 (or enroll online), Treasury opens the initial account; rollovers to financial firms will come later.
3. Get your documents ready. Have the child’s Social Security Number on hand. The $1,000 government seed applies to U.S. citizens born 2025–2028 once an election is made.
4. Ask HR about employer contributions. Some employers may offer up to $2,500 per year toward a child’s Trump Account (counts toward the $5,000 annual cap and is excluded from the employee’s income). Not every employer will, but early adopters may.
5. Coordinate with your other accounts (like 529 plans). Trump Accounts are broadpurpose and taxdeferred; 529s are educationrestricted with taxfree qualified withdrawals. You can use them sidebyside to cover different goals.

Final Thoughts:

Trump Accounts are a simple, kid-first way to turn good intentions into a real investing habit. They will not replace Roth IRA’s (great when a teen has earned income) or 529 plans (the workhorse for education costs), but they did add a flexible broad-purpose option that starts building ownership and financial literacy from day one. The rules are straightforward, the investments are low-cost, and the guardrails (no withdrawal until the year a child turns 18) help keep long-term goals on track.

If this fits your family, make it easy on yourself; put the election on your tax checklist, talk with HR about an employer contribution, and decide how a Trump Account will sit alongside your 529 plan and Roth IRA if your child or grandchild works. Maybe most importantly use it as a teaching tool. Show your child or grandchild what they own, track progress together, and celebrate the power of compounding. A small, consistent start now can grow into meaningful choices later, education, a first house, seed money for a business, or simply a stronger financial foundation.

I would like to begin and conclude this article with a quote from my dear friend, Bill Shurina. Bill, you are deeply loved by so many, and your legacy will live on. His words offer perfect guidance for this article and for the future of our country and our children:

“Be grateful for what you have and be ambitious for what you deserve.”