Key Takeaways
- Trump accounts are a new type of child savings vehicle designed to help build long-term wealth for eligible children.
- Children born between 2025 and 2028 may be eligible for an initial $1,000 federal government contribution, while all eligible children with Trump accounts can receive up to $5,000 per year in contributions from a variety of sources.
- Your wealth manager can help you compare Trump accounts with other custodial accounts and education savings options and decide how to fund and invest the account over time.
A provision of President Trump’s One Big Beautiful Bill Act (OBBBA) created this new type of savings account for children. Nicknamed “Trump accounts,” these accounts are structured as traditional IRAs with special rules that apply during a defined “growth period.” After that period ends, the account follows standard traditional IRA rules.
For families already focused on child savings, education funding or generational wealth planning, Trump accounts can be a powerful complement to tools like 529 plans and custodial accounts.
Eligibility
Trump accounts are available to U.S. citizens under the age of 18 who have a valid Social Security number. Parents or guardians can elect to establish one Trump account per eligible child by filing IRS Form 4547; beginning in 2026, accounts can also be opened through TrumpAccounts.gov. The parent or guardian would then manage the account until the child turns 18 (more on this below under Transition to Traditional IRA Rules).
These accounts are intended to help American children start saving and investing early, similar in spirit to earlier “baby bond” proposals but with their own contribution and investment rules.
Contributions
Trump account contributions can come from several sources, each with its own limits and rules. Annual contribution limits are defined on a per‑child basis, and families should pay close attention to how individual and employer contributions are combined.
U.S. Treasury contributions
Children born between January 1, 2025, and December 31, 2028, may be eligible to receive a one-time contribution of up to $1,000 from the U.S. Treasury, assuming eligibility rules (birth date, a valid Social Security number and other criteria outlined in Treasury and IRS guidance for Trump accounts) are met.
Parent and family member contributions
Parents, family members and other individuals can enhance a child’s savings by contributing to a Trump account, much like funding other child savings vehicles. Aggregate contributions from individuals and employers can’t exceed $5,000 per year per child.
Trump account contributions from individuals are made with after-tax dollars and aren’t eligible for an income tax deduction; however, they’re not treated as taxable income to the child and also don’t affect the child’s separate IRA contribution limits.
Employer contributions
Employers may make tax-free Trump account contributions of up to $2,500 per year per employee, which can be directed to the Trump account of the employee or the employee’s dependent(s). This limit is per employee, not per child, so if an employee has two eligible children, the employer could contribute up to $1,250 per child within the $2,500 annual cap. This amount is indexed for cost-of-living adjustments after 2027 under the OBBBA’s working families tax cuts provisions.
Qualified general contributions
Additional contributions can be made by state, local and federal governments as well as qualified 501(c)(3) non-profit organizations. These qualified general contributions don’t count toward the $5,000 aggregate annual limit that applies to individual and employer contributions, allowing some children to receive more total funding over time.
Special Rules for Trump Accounts
Trump accounts follow a unique set of rules during a designated growth period that doesn’t apply to other traditional IRAs. The growth period begins when the account is established and ends on December 31 of the year before the child turns 18. During this time, special restrictions apply to investments, contributions and withdrawals.
Investments
During the growth period, assets in a Trump account can only be invested in Treasury-approved options, which are currently limited to low-cost stock index funds and exchange-traded funds (ETFs) that are predominantly invested in U.S. companies. This framework is intended to give American children exposure to long‑term stock market growth while keeping investment choices relatively simple and diversified.
Families who want to compare the Trump account’s investment menu with other vehicles, such as 529 plans or custodial investment accounts, may find it helpful to review broader education and child savings strategies, like strategies for funding a child’s education in 2026 and alternatives to 529 plans.
Tax treatment
Trump accounts are tax-deferred investment accounts, meaning earnings grow tax-free while they remain in the account, and distributions are generally taxed later as ordinary income, similar to a traditional IRA. Contributions from individuals are made with after-tax dollars and aren’t deductible, but they also don’t count as taxable income to the child.
Because the Trump account is treated as a type of individual retirement account, it sits alongside more traditional options like custodial IRAs and traditional IRAs in a family’s broader savings strategy. Your advisor can help you weigh Trump accounts against Roth IRAs, 529 plans and other investment accounts for children.
Withdrawals during the growth period
Withdrawals from a Trump account during the growth period are tightly limited. Distributions are only permitted under specific circumstances, including:
- Qualified rollover contributions
- Distribution of excess contributions
- Qualified ABLE account rollover contributions
- Distributions following the death of the beneficiary
Outside these situations, the intent is for funds to remain invested throughout the growth period, allowing compounding to work on the child’s behalf.
Transition to Traditional IRA Rules
Beginning January 1 of the year the account beneficiary reaches age 18, the Trump account transitions to standard traditional IRA rules and is no longer subject to the additional restrictions described above. The ownership of the account is also converted from the parent/guardian to the child once this age milestone is met. At that time, the account holder is treated similarly to any other traditional IRA owner for purposes of investment flexibility, distribution options and tax treatment.
Taxation After the Growth Period
Following the growth period, Trump account distributions are taxed in the same manner as traditional IRA distributions. Assets withdrawn are taxed as ordinary income in the year of the distribution, and a 10% early withdrawal penalty may apply to distributions taken before the account holder reaches age 59 ½, unless an exception applies under IRA rules. Some withdrawal exceptions that avoid the early withdrawal penalty include qualified education expenses, the purchase of a first home or starting a business.
Because Trump accounts have their own statutory framework under the OBBBA, future IRS guidance may further clarify how they interact with standard IRA aggregation rules for taxes and penalties. Your advisor can help you evaluate which accounts to draw from first as the rules evolve.
How a Wealth Manager Can Help
Trump accounts sit at the intersection of child savings accounts, traditional IRA rules and new federal policy under the One Big Beautiful Bill Act. A wealth manager can help you:
- Decide how Trump accounts fit alongside 529s, custodial accounts and Roth IRAs in your family’s overall savings plan
- Coordinate contributions from family members, employers and charities without exceeding annual limits
- Plan future withdrawals and integrate Trump account assets into long‑term tax and retirement strategies
