02/05/2026
Have you heard of the new Trump Accounts?-- Here is some good info-
What are Trump Accounts?
A Trump Account is a traditional IRA established for a child and designated as a Trump Account at the time of opening, according to IRS guidance. The child for whom the account is opened is the beneficiary and the legal owner of the account.
Think of Trump Accounts as starter IRAs for kids. These new accounts operate in a custodial-style structure: The assets are owned by the child, while an adult—typically a parent or guardian—is authorized to act on the child’s behalf until the beneficiary reaches age 18.
Trump Accounts are designed to help families start saving and investing for a child’s future early, using a familiar retirement-account framework.
Under the new program, the Treasury Department will create and administer the initial accounts. Over time, families will be able to roll over the account to a financial provider that has a Trump Account product.
Who is eligible for a Trump Account?
Children under age 18 with a Social Security number are eligible for Trump Accounts. The Treasury’s pilot program adds a one-time $1,000 seed contribution for US citizens born between January 1, 2025, and December 31, 2028, when a tax election is filed on the child’s behalf. Only one funded Trump Account is allowed per child.
Children who aren’t eligible for the seed contribution can also get a Trump Account—they just won’t receive the $1,000 contribution. Families may still find good reasons to consider it.
How do Trump Accounts work?
Trump Accounts operate much like a custodial IRA, but with special rules for contributions, withdrawals, and investments. Families can fund the account through individual contributions, employer programs for both employee and employer contributions, or even charitable sources—each with its own tax treatment.
Who can contribute to a Trump Account?
Several sources can fund a Trump Account, making it flexible for families. Contributions can come from individuals, employers, and even charitable organizations. Each source has its own rules and tax treatment, so it’s important to understand how they work.
How much can you contribute to a Trump Account?
The total that can be contributed to a Trump Account is $5,000 per year. Multiple sources can contribute each year. Contribution limits apply across all sources combined with one exception: The government seed amount and qualified general contributions (i.e., from charitable organizations) don’t count toward the annual limit, which can make a big difference for eligible families.
• Government seed (pilot): A one-time $1,000 contribution for eligible newborns; it does not count toward annual limits. This one-time contribution plus any other qualified general contributions will be taxable when withdrawn.
• Individual contributions: Any adult can contribute, up to a combined total of $5,000 per year for the account (indexed for inflation after 2027). There’s no earned income requirement for the child. These contributions are made on an after-tax basis and are not taxable when withdrawn.
• Employer contributions and employee deferrals: A unique feature of the Trump Account is that it can be funded by both your employer and/or by you through a pre-tax payroll deduction option—similar to other benefit elections. As with other benefits, not every employer or plan may offer this feature.
o Employer-funded contribution: An employer may choose to contribute up to $2,500 per year per employee (indexed for inflation). If an employee has multiple children, the employer may split the contribution among children. For example, if you have 2 children, it could be split $1,250 per child. Employer contributions are excluded from the employee’s income, are made on a pre-tax basis, and count toward the child’s $5,000 annual contribution limit.
o Employee salary reduction: Employees can elect to redirect part of their pay pre-tax into a child’s Trump Account through their employer’s benefits plan. Combined employer and employee contributions cannot exceed $5,000 per child per year.
o Both types of contributions, employer and employee, count toward the $5,000 annual limit per child, and withdrawals are taxable because the contributions were made pre-tax.
Here’s an example. Andrew has 2 children, and his employer contributes $1,250 to each child’s account, for a total of $2,500. Andrew is also able to contribute $3,750 to each of his children’s accounts, subject to plan limits, bringing both to $5,000.
• General funding contributions: States, local governments, and 501(c)(3) charities may contribute. These do not count toward annual limits and are taxable when withdrawn.
• Rollovers: From another Trump Account, with tax basis carried over based on the source contributions in the original account.
Important: Contribution sources determine how future taxes apply to distributions. Keeping accurate records is essential. Regardless of source, earnings are taxable when withdrawn.
When can you withdraw from a Trump Account?
Trump Accounts are designed for long-term savings, so withdrawals are highly restricted before age 18.
Before that age, distributions are generally not allowed except for limited rollovers.
On January 1 of the year the beneficiary turns 18, the account could transition to a standard traditional IRA, but it is not a requirement and will be dictated by the terms of the IRA agreement with the custodian or trustee. The standard rules for traditional IRAs include a limit on withdrawals before age 59½. Early withdrawals are typically taxable and may face a 10% penalty unless an exception applies—such as certain education expenses, first-time home purchase (up to $10,000), birth or adoption costs (up to $5,000), qualifying medical expenses, disability, or terminal illness.
Visit IRS.gov to learn more about the exceptions: Retirement topics
– Exceptions to tax on early distributions
Required minimum distribution (RMD) rules apply.
What happens to Trump Accounts after the child beneficiary turns 18?
Once the beneficiary reaches age 18, families have several options:
• Keep the account as a Trump Account under general IRA rules. Though Trump Accounts will mostly follow traditional IRA rules, it could remain a separate type of account. Trump Accounts are not grouped with IRAs when determining how much of a withdrawal is taxable. In the case of multiple IRAs, the IRS uses the aggregation rule to determine the taxable amount of a withdrawal.
• Roll over the balance to a traditional IRA or another eligible retirement account or in some cases a workplace retirement plan. Note: A Trump Account may not automatically become a traditional IRA. You may need to take action if you want to roll over or convert the account.
• Consider a Roth conversion, if appropriate for the former minor’s tax situation.
How can you invest in a Trump Account?
Investment options for Trump Accounts are intentionally straightforward:
• Mutual funds or ETFs that track the S&P 500 or another equity index for which regulated futures contracts are traded, with at least 90% invested in US companies.
• No leverage is allowed in the investments, meaning borrowed funds cannot be used to purchase securities.
• Expense ratio cap: 0.10% (10 basis points) or less.
• Trustees may offer multiple options and must designate a default investment. Families can allocate across the menu within the constraints above.
This design aims to promote long-term, broad market exposure with very low costs and minimal complexity.
Summary of Trump Account features-
Benefits of Trump Accounts-- What to consider--
Tax-deferred growth potential
Limited investment menu
-No earned income requirement for contributions
-No withdrawals before age 18
-$1,000 government seed contribution for eligible newborns *Annual contribution cap of $5,000 per child
-Low-cost index fund/ETF investment options
Distribution will be taxed as income at child’s tax rate
Flexible funding sources Employer payroll feature depends on plan adoption
How do you open a Trump Account?
Opening a Trump Account starts with an election process through the IRS—either by filing Form 4547 or using the upcoming online tool at trumpaccounts.gov. Elections are scheduled for mid-2026, with accounts becoming available July 5, 2026. Once the election is complete, the Treasury will provide instructions to activate the account.
The IRS is expected to issue more guidance for rollover accounts at financial institutions, which can only be opened after the initial Treasury account exists. These details will be clarified as the program expands.
FOR MORE INFO, visit www.trumpacounts.org
-
