Understanding the New Trump Accounts
Trump Accounts are designed as a tax-advantaged savings vehicle for U.S. citizens under age 18. Find out how this account works and how your family can make the most of it.
Introduced under the One Big Beautiful Bill Act in 2025, “Trump Accounts” are a new federal savings program designed to give children an early financial headstart through long-term, tax-advantaged investing.
Any U.S. citizen child under the age of 18 may have a Trump Account opened, allowing parents, grandparents and employers to contribute on the child’s behalf. Children born between 2025 and 2028 receive a one-time $1,000 federal seed contribution, while older children may still open accounts but without the government seed money.
Trump Accounts have been established as “Internal Revenue Code §530A accounts,” structured similarly to an individual retirement account (IRA) for a minor. Accounts are invested in a low-cost U.S. stock index fund, with fees capped at 0.10%, and are intended to remain invested through childhood to benefit from long-term compounding. Total annual contributions from all sources are capped at $5,000 per child.
In addition to family and employer funding, certain private and philanthropic organizations have announced plans to make supplemental contributions for eligible children, particularly those in lower-income areas, which may result in some accounts receiving additional funding.
Parents or guardians will be able to file IRS Form 4547 to elect and establish a Trump Account, which can be done alongside their annual tax return or through the dedicated online portal, www.trumpaccounts.gov. Filling out IRS Form 4547 is also how eligible children will receive the $1,000 seed amount. Broader account availability and the ability to make contributions are expected to start on or after July 4, 2026. Accounts will be initially opened at BNY/Robinhood, with potential options to roll the accounts to other institutions at a later date.
Contributions to Trump Accounts are made with after-tax dollars and can grow in a tax-deferred manner. Once the child reaches adulthood, the account is treated as a traditional IRA under IRS rules, allowing standard IRA rollovers and Roth conversions, subject to normal taxation and requirements. The IRS has clarified that contributions to Trump Accounts will not require a Form 709 gift-tax reporting.
Planning considerations
- Employer contributions count toward the $5,000 annual cap
- Funds generally cannot be accessed before age 18, except in limited cases (such as ABLE account eligibility)
- Program rules may evolve as Treasury releases additional guidance
- From an estate planning perspective, because these accounts are for the exclusive benefit of the child, contributions will remove assets from the parents’ or grandparents’ taxable estate.
- Consider the potential for Roth conversions once the child is over the age of 18, but also be sure to keep in mind the possibility of “Kiddie Tax.” Kiddie is a special tax rule that taxes a child’s unearned income above a certain amount to the parent’s marginal tax rate. A Roth conversion may be an important consideration once the child is fully supporting themselves in their first post-schooling job.
Consider the potential for Roth conversions during the child’s college years, when they may have low or no earned income. This may create an opportunity where a child can convert funds to a Roth IRA up to the standard deduction ($16,100 for 2026), at little to no tax cost. Above that standard deduction amount, a child may fill up their 12% tax bracket ($12,401 to $50,500 in 2026), to convert additional amounts into the Roth IRA at a low tax cost.
Comparing modern savings strategies for children
The Trump Account was introduced as a tax-advantaged way to save for a child’s future. With the account converting to an IRA account at the age of 18, the Trump Account may be considered one way for a minor child to get a headstart on retirement planning. The chart below compares other savings account structures based on their designed purpose.
| Account Type | Trump Account (§530A) | 529 Plan | UGMA/UTMAUniform Gifts to Minors Act or Uniform Transfer to Minors Act (UGMA/UTMA) | Gift Trusts |
|---|---|---|---|---|
| Description | Federally created tax-advantaged savings account for minors, structured as a §530A account and treated similarly to a minor IRA | State-sponsored tax-advantaged education savings plan | Custodial account for a minor where assets transfer to the child at age of majority | Irrevocable Trusts where parents can transfer assets for the benefit of a named beneficiary. Gift Trusts can stipulate specific conditions on which a beneficiary may access the funds. |
| Contribution Limits (2026) | $5,000 annually per child from all sources (family + employer); $1,000 federal seed for children born between 2025–2028 | Lifetime limits vary by state (often $235k–$550k, but may be higher) | No contribution limit | No contribution limit |
| Income Limits for Contributions | None | None | No income limits, but annual gift tax exclusion and lifetime gift tax exemptions may be utilized | No income limits, but annual gift tax exclusion and lifetime gift tax exemptions may be utilized |
| Tax Advantages | After-tax contributions; tax-deferred growth; treated as a traditional IRA at adulthood | Tax-deferred growth; tax-free withdrawals for qualified education | No tax deferral; earnings taxed annually (Kiddie Tax rules may apply) | No tax deferral; depending on the structure, may be subject to the Grantor’s tax rate or at Trust tax rates |
| Usage of Funds | Converts to a traditional IRA at adulthood; standard IRA rules apply. The account can also be used for other purposes, but taxes, including a pre-59 ½ penalty tax, may apply on some distributions. | Qualified education expenses (college, K-12, student loans in some states) | Any use for the benefit of the child | Any use for the benefit of the child provided it meets income and/or principal access stipulations within the trust document |
| Access / Control | Generally no access before age 18 (limited exceptions); account converts at adulthood | Account owner controls withdrawals | Custodian controls until beneficiary reaches age of majority | Trustee is legally authorized to manage assets of the trust, including determining if a withdrawal is allowed under the terms of the trust |
| Impact on Financial Aid | Likely treated as retirement asset of the child | Minimal impact if parent-owned | Considered student asset; higher FAFSA impact | Considered student asset; higher FAFSA impact |
| Investment Options | Limited to low-cost U.S. stock index fund; fees capped at 0.10% | Limited by plan menu | Broad investment flexibility | Broad investment flexibility |
| Designed Purpose of the Account | Retirement | College expenses | Broad purposes, but generally considered for lifestyle of the child, such as education, buying a home, starting a business, etc. | Transfers from a parent to the benefit of a child that removes assets from the parent’s estate. Generally considered for the lifestyle of the child, such as education, buying a home, starting a business, etc. Can also be used for descendants of the child. |
| Other Notable Info | Employer contributions allowed; auto-enrollment not yetfinalized; Form 4547 election currently expected | Five-year front-loading allowed | Child gains full control atage ofmajority | Child’s ability to gain control of the funds is stipulated by the trust document, allowing access to be as liberal or restrictive as the Grantor intends |
As with the other program types listed in the chart above, the Trump Account conveys certain tax advantages and is designed to help save for a child’s future. If you’re interested in seeing which account(s) may be appropriate for your child, a Corient Wealth Advisor can help you assess the various strategies based on your family’s unique financial circumstances and tax situation. Contact us today to learn more.
Sources:
https://www.fidelity.com/learning-center/smart-money/how-much-to-save-for-college
https://www.irs.gov/pub/irs-drop/n-25-68.pdf
https://hudacklaw.com/irrevocable-gift-trusts/
https://home.treasury.gov/news/press-releases/sb0433
ABOUT THE AUTHOR
Blake McDaniel
Blake is a Wealth Planner in our Atlanta, GA office. He began his career in military intelligence and drone operations with the 7th Special Forces Group before transitioning to finance. Since then, he has worked with multiple RIAs serving high‑net‑worth individuals.
Blake has an academic background in business analytics, finance, and intelligence analysis, and is currently completing his Master’s in Finance with a concentration in Financial Planning, which will fulfill the educational requirements for the Certified Financial Planner™ designation.
Outside of work, Blake enjoys staying active and spending time outdoors. He is a member of the Atlanta Run Club and the Exiles Rugby Club, and he volunteers with a local animal shelter, supporting dogs in need.
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US 5748860 – July 2026
