Trump Accounts: What To Know
By Aegean Cuylan, CFP®, Affinity Wealth
You may start hearing about a new savings program called Trump Accounts. These accounts were created under the One Big Beautiful Bill Act (OBBBA) passed in July 2025 and are designed to help families start investing for their children early.
The goal is simple: give kids a financial head start and allow money to grow over time through long-term investing.
The program is expected to launch on July 4, 2026, when families will be able to open accounts.
What Is a Trump Account?
A Trump Account is a tax-advantaged investment account for children under age 18.
While parents or guardians open and manage the account while the child is young, the child is considered the account owner. When they turn 18, the account transfers fully into their control.
Think of it as a long-term investment account designed to grow while a child is growing up.
Who Can Open the Account?
Parents or legal guardians can open the account by filing IRS Form 4547 along with their taxes or submitting the election form online through TrumpAccounts.gov.
Accounts must be opened before the year the child turns 18.
Any U.S. child under 18 with a Social Security number is eligible to have an account established.
Is There a Government Contribution?
Possibly.
Children born between January 1, 2025 and December 31, 2028 may receive a one-time $1,000 deposit from the federal government.
Some children may also qualify for additional charitable deposits, such as a $250 contribution funded by the Michael & Susan Dell Foundation if they are under age 10 and fall under certain households’ income thresholds.
These deposits do not count toward the annual contribution limits.
How Much Can Be Contributed?
Family members, friends, and even employers can contribute to a child’s Trump Account.
The current limit is $5,000 per year per child.
Even employers may contribute up to $2,500 annually, which counts toward the $5,000 total contribution limit. Contributions can be made either by your employer or by you through a pre-tax payroll deduction option, similar to other benefit elections. As with other benefits, not every employer or plan will offer this feature.
Unlike retirement accounts such as IRAs, the child does not need earned income in order to receive contributions while they are under 18.
How Is the Money Invested?
The money must be invested in low-cost mutual funds or ETFs (0.10% (10 basis points) or less) that track broad market indexes with at least 90% invested in U.S. companies.
This restriction is designed to keep the investment strategy simple and focused on long-term growth and diversification.
How Are Taxes Handled?
Trump Accounts receive tax-deferred treatment, similar to a traditional IRA.
Here’s how that works:
Contributions
Contributions are made with after-tax dollars
They are not tax-deductible
Growth
Investments grow tax-deferred, meaning there are no taxes on dividends or gains while the money stays in the account
Withdrawals
When money is withdrawn, contributions (made with after-tax dollars) are not taxed, only the growth is taxed as ordinary income.
When Can the Money Be Used?
The funds are generally locked up until the child turns 18.
Once the child reaches adulthood, the account begins operating under traditional IRA rules.
Withdrawals before age 59½ may be subject to a 10% early withdrawal penalty, although there are exceptions for certain purposes such as:
Higher education expenses
First-time home purchases
Starting a business
What Happens at Age 18?
At age 18, the account transfers fully to the child.
From that point forward:
Only the child can make additional contributions
Contributions must follow traditional IRA rules, including having earned income
Contributions are made on a pre-tax basis (deductible) if they have earned income
The child controls the investment decisions and withdrawals
Previously, contributions were made with after-tax dollars, but the, now adult, beneficiary can, from age 18, make tax-deductible contributions to the account.
One of the biggest considerations for parents is that the funds belong to the child once they reach adulthood.
How Does This Compare to Other Savings Options?
Trump Accounts may be helpful for some families, but they are not necessarily a replacement for other savings tools.
For example:
529 plans may still be more efficient for families specifically saving for college because qualified withdrawals are tax-free.
Custodial investment accounts offer more flexibility with fewer restrictions on how funds can be used, and different tax treatment.
Each option has different benefits and rules, so it often makes sense to look at them as part of a broader strategy rather than choosing only one.
Our Perspective
While the details of the program are interesting, the bigger takeaway is really about starting early.
One of the most powerful tools in investing is time. Money invested early has the potential to grow for many years through compound returns.
When kids grow up knowing they have an investment account in their name, it can help them develop a healthier relationship with saving, investing, and long-term planning.
Programs like Trump Accounts are designed to encourage early investing and give young people a financial foundation.
For many families, this may end up being one piece of a larger strategy, alongside tools like 529 plans, custodial investment accounts, and long-term retirement savings.
As more details continue to emerge ahead of the July 4, 2026 launch, we’ll be keeping an eye on how these accounts fit into broader financial planning for families.
