What Parents Should Know about Trump Accounts
07/20/26
A Trump account is a new savings accounts for children created by last year's tax legislation. They officially launched on 07/04/26, and there's already real money on the table for eligible families. Here is an overview.
Who gets the free $1,000: Many children are eligible to receive a $1,000 deposit from the U.S. Treasury, invested automatically in a low-cost index fund. To qualify, a child needs to be a U.S. citizen with a valid Social Security number and born between January 1, 2025, and December 31, 2028. If your child’s date of birth falls outside that window, they can still have a Trump Account opened in their name if they are under 18 years old; they just won't get the government's $1,000 contribution.
Growth is tax-deferred: Once money is in the account, it grows without being taxed year to year. This is similar to how a Traditional IRA works. You won't owe anything on the gains as they accumulate; taxes come into play later, when the account converts to a traditional IRA at age 18.
No earned income required: This is a key different from a custodial Roth or Traditional IRA for kids, which require the child to have earned income before anyone can contribute. Trump Accounts don't have that restriction, so parents, grandparents, and friends can contribute regardless of whether the child has a job.
Contribution limits: Total contributions from individuals and employers combined are capped at $5,000 per year not including the government’s $1,000 contribution. Employers can contribute up to $2,500 of that as a tax-free benefit. These numbers will likely change in the future to adjust for inflation.
Meant for Retirement, not College: Unlike a 529 plan, these accounts aren't designed with education in mind; they're built for retirement. At 18, the account rolls into a traditional IRA, and normal IRA withdrawal rules apply from there. Families looking to save specifically for college costs will likely still want a 529 alongside this, rather than instead of it. Families looking to save for a future wedding or other non-educational expenses will want to consider an UGMA or brokerage account in their own names to pass along the funds to their child later.
How to Open: File form 4547 on the Trump app. You can find more information at www.trumpaccounts.gov.
*Do not use this as advice about your specific situation. Please contact me to talk about your specific situation. You are never charged for meetings or advice.