Trump Accounts: What Every Parent Needs to Know

If you have a minor child, it’s worth taking a few minutes to learn how a Trump Account works and decide whether opening one fits your family’s plan. Contributions begin on July 4, 2026, and we’d welcome a conversation to discuss your options further.

What is a Trump Account?

A Trump Account is a new type of tax-advantaged savings account created under the federal tax code meant to give every American child a long-term financial foundation. Think of it as a hybrid between a children’s savings account and a traditional individual retirement account (IRA) where contributions grow tax-deferred for years.

The headline feature is free money—but only if you claim it. The US Treasury will deposit $1,000 into the account of every child who is a US citizen with a Social Security number and is born between January 1, 2025, and December 31, 2028. To open an account and receive the deposit, a parent must file IRS Form 4547. Beyond that government seed money, contributions are entirely optional.

Importantly, you don’t have to be born in that 2025 to 2028 window to have a Trump Account. The window only governs who is eligible for the $1,000 seed money. Any eligible child under 18 can still have a Trump account if one is opened for them, as long as the account is opened before January 1 of the year the child turns 18. Beyond the US Treasury, others have also offered to make free contributions, so having a Trump Account may be worthwhile. For example, The Dell Foundation has pledged $250 for children age 10 and under—but born before January 1, 2025—living in a ZIP code with median income under $150,000 (the first 25 million accounts qualify).

How do I open a Trump Account?

To open a Trump Account, an authorized individual (in priority order, the child’s legal guardian, parent, adult sibling, or grandparent) files IRS Form 4547. The form can be attached to your tax return, mailed in at any time, or submitted online through the IRS’s Online Account for Individuals. Filing Form 4547 does not require amending your tax return.

You can file the form now, even though Trump Accounts don’t go live and begin accepting contributions until July 4, 2026. You don’t need to set up a brokerage account in advance; after your form is processed, you’ll receive an activation link to set up the account. Initially, the accounts will be available through BNY and Robinhood (managed largely through an app), with Schwab and Fidelity expected to follow once additional Treasury regulations are finalized.

How does a Trump Account work during childhood?

From birth until January 1 of the year the child turns 18—a stretch the government calls the “growth period”—a parent or legal guardian manages the account on the child’s behalf. Money can be contributed in several ways during the growth period.

Anyone, including parents, grandparents, and family friends, can make direct contributions of up to the account’s $5,000 annual limit. A parent’s employer may chip in up to $2,500 per year, but their contributions count toward the $5,000 cap. Some large employers have signaled they intend to offer this benefit. Charitable organizations and government entities can also add contributions for children who meet certain eligibility criteria, and their contributions don’t count against the annual limit. Unlike traditional and Roth IRAs, there’s an important deadline: Contributions for a given year must be made by December 31, with no grace period.

During the growth period, the account balance can only be invested in broad, low-cost US stock index funds—funds that track something like the S&P 500, carry annual fees of no more than 0.1%, and avoid leverage or narrow sector bets. The rules are designed to keep costs low and the strategy simple. Generally, no withdrawals are allowed until the year the child turns 18.

What happens to a Trump Account when the child reaches 18?

After January 1 of the year the child turns 18, the growth period ends, the investment restrictions lift, and the account is largely treated like a traditional IRA. The now-adult becomes the owner, and they have four choices:

1. Keep it as a Trump Account;
2. Roll it into a traditional IRA;
3. Convert it to a Roth IRA; or
4. Take a distribution.

Withdrawals before age 59½ are generally taxed and hit with a 10% early-withdrawal penalty, though exceptions exist for things like qualified education expenses, a first home (up to $10,000), and birth or adoption costs.

What are the benefits of Trump Accounts?

The most obvious advantage is the $1,000 of free government money, plus any employer or charitable contributions—these represent immediate, tax-advantaged savings at no cost. Another advantage is the power of time. Money invested at birth has nearly two decades to compound before adulthood, and decades more if left untouched. Official projections suggest an account opened at birth could reach roughly $6,000 by age 18 with no added contributions beyond the initial $1,000 from the US Treasury, and far more with steady deposits—contributing the full $5,000 a year could build a balance of nearly $270,000 by 18, assuming historical-average growth. Those figures are estimates only and are not guaranteed.

A Trump Account also doesn’t crowd out other savings. Contributions don’t count toward the child’s IRA limits, so a family can use both. And as the child grows, watching a real account of theirs rise and fall can be a hands-on lesson in investing and financial literacy.

What are key considerations of Trump Accounts?

Trump Accounts are best understood as retirement-focused vehicles, which means they may not be the right tool for near-term goals. For education expenses, a 529 plan usually offers better tax treatment; for shorter-term needs, custodial Uniform Transfers to Minors Act or Uniform Gifts to Minors Act accounts may fit better. The early-withdrawal penalty makes tapping the money before 59½ costly in most cases.

There are tax wrinkles, too. Because the account can’t be touched until the child turns 18, the IRS may treat contributions from parents, grandparents, or others as “future-interest” gifts that don’t qualify for the usual annual gift-tax exclusion—potentially triggering a gift-tax filing. A common workaround is to gift into a child’s custodial account first, then transfer the money to their Trump Account. State taxes are another consideration: While contributions and earnings are generally not taxable at the federal level, several states—currently California, Hawaii, Kentucky, Massachusetts, Pennsylvania, South Carolina, and Wisconsin—are expected to tax the account’s annual earnings, so residents there have extra tracking and planning to do.

Timing also matters when it comes time to convert. A Roth conversion is often the most efficient move, but converting too early can expose the gains to the “kiddie tax,” which can tax a child’s unearned income at the parent’s marginal rate. For that reason, the sweet spot for starting conversions is usually age 19 (or 24 for a full-time student), and it often makes sense to spread conversions over several lower-income, early-career years. Make sure you plan ahead for who will pay the tax on the conversion.

Finally, there’s the human factor. At age 18, your child gains full control of what could be a sizable sum—with nothing legally stopping them from cashing it out. Families who spend years funding an account should plan to talk with their child about its purpose long before that birthday arrives, so the money is treated as a foundation rather than a windfall.

For many families with an eligible child, claiming the $1,000 is worth considering—especially since further contributions are optional. How you use the account from there depends on your broader financial picture and how a Trump Account fits alongside 529 plans, IRAs, and other accounts.

If you have any questions about Trump Accounts, reach out to your Cerity Partners advisor or request an introduction today.