New for 2026: Tax-Advantaged Savings Accounts for Kids
Saving for the future is something all kids should be encouraged to pursue. With the new Trump Accounts, qualifying children will have an opportunity to do just that.
On December 2, 2025, philanthropist billionaires Michael and Susan Dell announced a $6.25 billion donation to help fund the recently introduced tax-advantaged savings accounts—known as Trump Accounts—for 25 million children. These new accounts, which will launch on July 4, 2026, aim to help families save while teaching kids essential financial concepts like investing and compound growth. The Dell’s generous pledge is for most children aged 10 and under who don’t qualify for the federal newborn contribution. Each qualifying child will receive a $250 deposit into their accounts.1
What are Trump Accounts?
These accounts were signed into law with the One Big Beautiful Bill Act (OBBBA) on July 4, 2025, and are designed to help promote long-term savings and wealth building for the younger generation. Once the accounts become active on July 4, 2026, any U.S. child under the age of 18 with a Social Security number may qualify. Newborns in the years 2025 through 2028 will also benefit from a “head start,” as the U.S. Treasury will make a one-time $1,000 deposit into their accounts.
If your child qualifies, you’ll be able to contribute up to $5,000 per eligible child. Employers will also have the chance to donate up to $2,500 for each account. Theoretically, an employer can donate $2,500 into a child’s account, while the parents may also fund $2,500 into the account, thereby fulfilling the total maximum account contribution of $5,000. In terms of taxation, Trump Accounts work much like non-deductible IRAs: contributions are not tax-deductible, but growth is tax-deferred. When distributions occur, earnings are taxed at ordinary income rates. This structure gives kids market exposure without parents needing to worry about taxes during the growth phase.
Account investment options
As contributions flow into an account, the investments that the account is permitted to hold are fairly restrictive. These accounts will only have investment access to index exchange-traded funds (ETFs) or mutual funds with low expense ratios, so that the child has exposure to a broader investment style and diversified portfolio of assets, rather than only a few individual holdings.
Not only will this requirement take the pressure off parents to pick the right individual stocks, but it’ll also teach the child about the basics of investing. As they get older, the child will gain more knowledge of how the markets function and what it means when the nightly news, for example, references how the S&P 500 Index and the Dow Jones Industrial Average performed on a given day. Once the account-holding child turns 18, the account’s restrictions will be lifted. At that point, the child has full access to their account for qualified uses, such as a down payment on a home, funding education, etc. They’ll also be allowed to invest the account funds in more complicated products, such as individual stocks, bonds, etc. Since this account will act very much like a traditional IRA, it means the account owner may be subject to a 10% tax penalty if they pull money out for non-qualified items before age 59 ½.
As well, similar to a traditional IRA, the account would become eligible to perform Roth conversions once the child turns 18. Assuming that the child has no or very little earned employment income, the conversions could be performed at a low tax bracket and be able to benefit from the potentially advantageous tax treatment of a Roth IRA account.
Why Trump Accounts matter
These accounts should be viewed as another bucket that parents, grandparents or other relatives may contribute to, in order to help the younger generation save for the future. Along with other savings vehicles that kids can take advantage of, such as 529 plans and Roth IRAs, this will encourage a child to learn the importance of long-term saving/investing and how it could profoundly impact their future.
While a common lament these days is how the younger generations lack sufficient financial literacy, this new initiative could be a great way to teach them about money and investing using real-life examples from their own accounts. It may also indirectly benefit the older generations, as contributing to these accounts will give them another avenue to transfer wealth out of their taxable estate, since the contribution would qualify against the annual gift exclusion for individuals. Over time, the growth from the contributions that have been removed from a contributor’s estate and added to a recipient’s future savings may be a win-win for the parties involved.
If you have questions or want to explore these Trump Accounts in 2026, contact your Corient Wealth Advisor today to start planning now.
1 https://www.whitehouse.gov/articles/2025/12/landmark-dell-gift-supercharges-trump-accounts-for-americas-kids/
ABOUT THE AUTHOR
Jon Peterson
Jon is an Associate Wealth Advisor in our Charlotte office. He specializes in comprehensive financial planning and investments that are dedicated to empowering clients and advisors with tailored strategies for wealth growth and security. With experience in retirement planning, portfolio management, and risk assessment, Jon helps deliver personalized solutions to meet diverse financial goals. Jon is a CERTIFIED FINANCIAL PLANNER® professional who also played Division 1 college baseball at Longwood University in Farmville, VA where he earned his bachelor’s degree in finance with a minor in Economics. In his free time, you will find Jon actively participating in a variety of sports while also rooting for his favorite college football team, the Penn State Nittany Lions.
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5065823 – December 2025
