What to Know About Trump Accounts
Key Takeaways
- Trump Accounts are long-term, tax-advantaged investment accounts for children.
- Children born between Jan. 1, 2025, and Dec. 31, 2028, will receive a one-time $1,000 deposit from the U.S. Department of the Treasury.
- Parents, grandparents, friends, relatives and even employers can contribute to a child’s account.
Time is the most critical factor in building wealth. Yet many people don’t start saving for retirement until around age 25, causing them to miss valuable years of compounding. Starting early matters, and with the launch of Trump Accounts on July 4, 2026, families can begin contributing to a child’s retirement account as early as the day the child is born.
Authorized by the One Big Beautiful Bill Act, Trump Accounts are designed to encourage Americans to invest in their children’s financial futures.
“With a Trump Account, parents, grandparents, friends, relatives and even employers can contribute on behalf of a child and start their retirement savings early,” says Sam Richter, CPA at CWA.
As an added incentive, children born between Jan. 1, 2025, and Dec. 31, 2028, will receive a one-time $1,000 deposit from the U.S. Department of the Treasury.
How Trump Accounts Work
A Trump Account is a long-term, tax-advantaged investment account opened in a child’s name and managed by a parent or authorized adult until the child turns 18. Contributions of up to $5,000 per year grow tax-deferred during that period.
When the child reaches age 18, the special restrictions on the account lift, and it starts acting as a traditional Individual Retirement Account (IRA).
“This creates a planning opportunity to convert the pre-tax funds to a Roth IRA while your child is in college and likely in a lower tax bracket, allowing the money to continue growing tax-free for the rest of their life,” says Sam.
Funds can be accessed without penalty for certain qualified expenses like education, a first home purchase or starting a business. Normal withdrawals before retirement age would be subject to a 10% penalty plus ordinary income tax.
Contributions to a child’s Trump Account are made with after-tax dollars, meaning contributing to your child or grandchild’s account is considered a gift.
Business owners may include Trump Accounts in a Section 125 Cafeteria Plan and contribute up to $2,500 per employee for the benefit of their employees’ children.
“It’s important to note that this cannot be done for the benefit of just the employer and their children,” says Sam. “The laws behind Section 125 Plans require employees receive the majority of benefits from a Cafeteria Plan. Consider this if you’re looking to bolster the benefits your practice offers to all staff in addition to a retirement plan, health insurance, CE, and other benefits.”
How to Set Up a Trump Account
To open an account, visit trumpaccounts.gov, complete IRS Form 4547, download the app and create an account. The account is for a child who is under age 18 at the end of the calendar year in which the account is opened, is a U.S. citizen and has a valid Social Security number.
Contributions to the account can be made starting July 4, 2026. Also starting July 4, eligible children with an active account will begin receiving the $1,000 seed deposit.
The account balance will continue to grow over time, with or without contributions. By age 27, an account opened at birth with a $1,000 initial deposit could grow to this:
How Trump Accounts Stack Up
There are several savings accounts available for the children of business owners and non-business owners. These include 529 college savings plans, Minor Roth IRAs, brokerage accounts and Coverdells.
Not every family can fund multiple savings vehicles at once. Sam recommends prioritizing saving for college through a 529 plan, also known as a Qualified Tuition Program. In some cases, unused 529 funds can be rolled into a Roth IRA, offering potential flexibility as both an education and retirement savings tool.
“While these accounts all serve an important purpose, if you’re unable to do everything, college savings in a 529 plan often provides the largest benefit to a child when started early given the completely tax-free growth,” says Sam. “Funding college can help our kids start at zero, not from behind. This is where I recommend starting if you must make a choice.”
The savings vehicles you use to accomplish your long-term goals matter. From supporting dependents to securing your own retirement and family legacy, our team can help you feel confident in your savings plan. To connect with an advisor, set up your free consultation today.
