What Are Trump Accounts for Children?
The One Big Beautiful Bill Act (OBBBA) introduced a new tax-advantaged savings option for families called Trump Accounts (TAs). These accounts are designed to help children build long-term financial security with government support and tax-deferred growth.
Under a pilot program, parents can open a Trump Account for a U.S. citizen child born between 2025 and 2028. Eligible children in this window receive a $1,000 federal contribution to jump-start their savings. Older children under age 18 can also open accounts if they have a Social Security number, but they won’t receive the government seed money.
How to Open a Trump Account
Parents can create a Trump Account by filing Form 4547: “Trump Account Election(s)” with their 2025 federal tax return. The form can also be submitted separately through an IRS online portal expected to launch soon.
Once the account is established, contributions can begin after July 3, 2026.
Contribution Limits
Annual family contributions
Parents, grandparents, and other individuals may contribute up to a combined total of $5,000 per year per child. This limit will be indexed for inflation beginning in 2028.
Importantly, the $1,000 government contribution does not count toward the annual cap.
Example:
If your child is born in 2025, the account could receive $1,000 from the government plus up to $5,000 in private contributions in 2026.
Employer contributions
Employers may also participate in the program.
After July 3, 2026, employers can contribute up to $2,500 annually to a Trump Account for:
- an employee under age 18, or
- an employee’s eligible dependent under age 18
Employer contributions:
- are tax-deductible for the business
- are excluded from employee taxable income
- count toward the $5,000 annual contribution limit
An employer cannot exceed $2,500 per employee, even if the employee has multiple eligible children.
Government and nonprofit contributions
State, local, or tribal governments and qualified 501(c)(3) nonprofits may also contribute under IRS rules. These contributions:
- are tax-free
- are not subject to the $5,000 annual cap
- must be distributed equally to all children in a defined group
Tax Benefits and Investment Rules
Individual contributions to Trump Accounts are not deductible, but earnings grow tax-deferred while funds remain in the account.
Withdrawals are generally prohibited before the year the child turns 18.
Investment restrictions
Until age 18, Trump Accounts may invest only in approved low-cost funds:
- mutual funds or ETFs that track a qualified index
- no leverage allowed
- fees capped at 0.1%
- additional IRS criteria may apply
These rules are designed to encourage safe, long-term growth rather than speculation.
What Happens at Age 18?
When the child turns 18, the Trump Account automatically converts into a traditional IRA.
At that point:
- new contributions require earned income
- IRA contribution limits apply
- eligible contributions may become tax-deductible
- withdrawals become allowed but may be taxable
- early withdrawal penalties may apply
Because of these penalties, the strongest strategy is often to leave the money invested for retirement.
Long-Term Growth Potential
Trump Accounts can become powerful wealth-building tools.
For example:
- $5,000 contributed annually for 17 years
- plus the $1,000 government seed
- earning a 5% annual return
By age 18, the account could grow to roughly $138,000.
If left invested until age 65 at the same rate, the balance could approach $1.4 million, not including any future IRA contributions made by the child as an adult.
Are Trump Accounts the Best Option?
While Trump Accounts offer strong long-term benefits, they aren’t always the best fit for every goal.
If your priority is education savings, a Section 529 plan may be more appropriate. Qualified education withdrawals are tax-free, and leftover funds can eventually be rolled into a Roth IRA under certain rules.
Choosing between these options depends on your family’s financial priorities.
Final Thoughts
Trump Accounts are especially attractive for families eligible for the $1,000 government contribution. Even without it, the tax-deferred growth and disciplined structure can make these accounts a valuable addition to a child’s financial future.
Before contributing large amounts, compare Trump Accounts with other tax-advantaged strategies to ensure you’re aligning savings with your long-term goals.
If you’re unsure how Trump Accounts fit into your financial plan, consulting a tax or financial professional can help you make the most informed decision.