Trump Accounts: What They Are, Who Qualifies, and How They Work
The IRS has recently released initial guidance on Trump Accounts, a new type of tax-advantaged account designed to help families save and invest for children. While there are still some details to come, we now have enough information to understand the basics: what these accounts are, who qualifies, and how they generally work.
What Is a Trump Account?
Launching July 5th, 2026, a Trump Account is a long-term investment account meant to save and grow money for a child’s future. Some children will also receive a $1,000 contribution from the government. While a parent or guardian opens and manages the account, the child is the account owner.
Trump accounts have rules for when money can be taken out and there are tax implications to be mindful of, but more on that to come.
Who Qualifies for a Trump Account?
A child must meet all three of the following requirements:
- Be under age 18 at the end of the year the election is made.
- Be a U.S. citizen
- Have a valid Social Security number
That said, eligibility for a Trump Account does not automatically mean the child qualifies for the $1,000 government contribution.
Who Qualifies for the “Free” $1,000 Contribution?
Only children born in 2025-2028 are eligible for the $1,000 government contribution (“Pilot Program Contribution”). It’s important to know that this $1,000 contribution can only be elected by a parent or guardian who claims the child on their tax return.
How Do You Open a Trump Account?
Parents or guardians with a qualifying child open a Trump Account by filing IRS Form 4547. This form can be included with your federal tax return, or an online election option is expected to be available in summer 2026.
Who Can Contribute and How Much?
Contributions can come from several different sources, and the rules vary based on the source.
- Contributions from Parents, Family, and Friends
- Up to $5,000 per year per child
- There is no tax deduction for contributing, but when you take withdrawals in the future, you will not owe taxes on those contributions.
- Pilot Program Contribution
- $1,000 for qualifying children
- Taxable when money is taken out
- Employer Contributions
- Up to $2,500 per year, inflation-adjusted starting in 2027
- Contributions from employers count toward the family limit of $5,000 per year per child
- Taxable when money is taken out
- Employers may choose to allow employees to contribute pre-tax
- Qualified General Contributions
- Contributions funded by states for certain groups of children
- Taxable when money is taken out
The account is opened. Now what?
There will be an online account where you can log in, see the balance, and track how the money grows over time. While it’s not yet clear exactly which financial institutions will hold these accounts, we do know how the money can be invested. The funds will be limited to simple, low-cost investments, generally, mutual funds or exchange-traded funds (ETFs) that invest mostly in U.S. companies. Additionally, in most cases, the funds cannot be withdrawn until the child turns 18.
What Happens When the Child Turns 18?
The child gains full control over the account on January 1 of the year they turn 18. At that point, Trump Accounts generally begin to follow the rules of a traditional IRA.
For example:
- Qualified withdrawals for eligible expenses such as higher education or a first-time home purchase are taxed at ordinary income rates, with no additional penalty.
- Non-qualified withdrawals before age 59½ are subject to ordinary income tax plus a 10% penalty.
Bottom Line
Trump Accounts offer a new way to think about long-term investing for children, but they also come with specific rules and timing considerations. While the overall framework is becoming clearer, additional guidance is still expected as the program continues to roll out.
If you have questions about whether a Trump Account could fit into your family’s broader financial plan, we’re happy to help walk through the options.
