Trump Accounts: What Every Parent Needs to Know
How Trump Accounts work for kids under 18, who is eligible for the $1,000 pilot contribution, tax rules, and how they compare to 529 plans and custodial accounts.
Updated October 2026. Contributions opened July 4, 2026, Treasury began the $1,000 pilot deposits to activated accounts the same day, and the election can now be made through your IRS Online Account.
If you have a child under 18, there is a new savings tool you should know about. Created under the One Big Beautiful Bill Act (IRC 530A), Trump Accounts are tax-advantaged investment accounts designed to give kids a financial head start, and they are available to any child under 18 with a Social Security number.
Here is how they work, who qualifies, and whether they make sense for your family.
What Is a Trump Account?
Think of it as a hybrid between an IRA and a 529 plan. Money goes in after-tax, grows tax-deferred, and stays locked until your child turns 18. At that point, the account converts into a traditional IRA, and your child can use the funds for college, a first home, or long-term retirement savings.
Unlike a 529, there is no requirement that the money be used for education. And unlike a custodial brokerage account, the growth is not taxed year to year.
Who Qualifies?
Any child under the age of 18 with a valid Social Security number. There are no income limits or other restrictions for the parents or guardians opening the account.
However, there is an important distinction based on when your child was born:
U.S. citizens born between January 1, 2025 and December 31, 2028: Your child is eligible for a one-time $1,000 contribution from the Treasury under the Trump Accounts contribution pilot program (IRC 6434), provided you make the election for the child and activate the account. Treasury set July 4, 2026 as the start of the $1,000 deposits to activated accounts, and post-launch reports confirm deposits have been made. As of October 2026, the pilot rules are still in proposed regulations (IR-2026-31, March 2026), so details could change when final rules are issued.
Born before 2025 (but still under 18), or not a U.S. citizen: You can still open a Trump Account, but your child is not eligible for the $1,000 pilot contribution. You will be starting from zero and funding it yourself.
The Dell Foundation boost: Up to 25 million children age 10 or younger who were born before 2025 and live in ZIP codes where the median income is below $150,000 may receive a $250 charitable deposit from the Michael and Susan Dell Foundation.
How Much Can You Contribute?
The annual contribution limit is $5,000 per child for 2026 and 2027, indexed for inflation after 2027 (IRC 530A(c)(2)). That limit includes contributions from all sources (parents, grandparents, family, friends) but does not count the $1,000 pilot contribution or qualified charitable and government contributions.
Employers can also contribute up to $2,500 per year toward that $5,000 cap, and that amount generally is not treated as taxable compensation to the parent. Employers including Intel, JPMorganChase, BlackRock and Charles Schwab have announced matches.
Your child does not need earned income to receive contributions, which is a key difference from a traditional IRA.
How Is the Money Invested?
Trump Accounts are limited to approved investments, generally low-cost index funds or ETFs that track the S&P 500 or another index of primarily U.S. equities. Annual fund fees are capped at 0.1%, keeping costs low.
You will not be picking individual stocks or bonds. The idea is simple, long-term, diversified growth.
What About Taxes?
This is where it gets a little nuanced:
- Contributions are not tax deductible. You are putting in after-tax dollars.
- Growth is tax-deferred. You will not owe taxes on dividends or capital gains while the money is in the account.
- Withdrawals are split. Only after-tax contributions from the family (parents, grandparents, friends) create basis, and that portion comes out tax-free. Everything else is taxed at your child’s ordinary income tax rate when withdrawn: the earnings and growth, employer contributions, the Treasury $1,000 pilot deposit, and charitable deposits such as the Dell Foundation $250.
Penalty-free uses after age 18: Once the account is treated as a traditional IRA, the usual IRC 72(t) exceptions apply. The two most relevant are qualified higher education expenses (IRC 72(t)(2)(E)) and a first-time home purchase, which is capped at $10,000 over the account holder’s lifetime (IRC 72(t)(2)(F) and 72(t)(8)). Withdrawals before age 59½ for other purposes generally owe a 10% additional tax on top of the income tax on earnings.
How Does It Compare to Other Options?
| Feature | Trump Account | 529 Plan | Custodial Account (UTMA) |
|---|---|---|---|
| Tax on contributions | Not deductible | State deduction in some states | Not deductible |
| Growth | Tax-deferred | Tax-free (if used for education) | Taxed annually (kiddie tax may apply) |
| Withdrawals | Earnings and non-family contributions taxed as income | Tax-free for education | Taxed at favorable capital gains rates |
| Use restrictions | Penalty-free for college, first home (up to $10,000 lifetime) | Must be used for education (or pay penalty) | No restrictions |
| Contribution limit | $5,000/year | Varies by state (typically much higher) | No federal limit |
| Control | Child owns at 18 | Parent retains control | Child owns at age of majority |
There is no single “best” account. It depends on your goals. If you are saving specifically for education, a 529 is still hard to beat. If you want flexibility with no restrictions, a custodial account gives you that. The Trump Account sits in between, offering tax-deferred growth with moderate flexibility.
How to Open One
Parents or legal guardians open a Trump Account by making an election on IRS Form 4547, Trump Account Election (Rev. December 2025), which can be filed with your tax return or on its own through trumpaccounts.gov. Since May 28, 2026, you can also make the election through your IRS Individual Online Account (IR-2026-68). Contributions opened on July 4, 2026, twelve months after the law was enacted (IRC 530A), so accounts can be funded now.
Do not skip the activation step. Making the election is not the last step. After the election is processed, Treasury sends an email from no-reply@TrumpAccounts.Treasury.gov with instructions to activate the account through the Trump Accounts app or at trumpaccounts.gov. The $1,000 pilot deposit goes to activated accounts, so if you made the election and have not seen that email, check your spam folder. As always, go to the official site directly rather than clicking links in an unexpected message if you are unsure whether an email is genuine.
Each child can only have one Trump Account, and only an authorized individual (typically a parent or legal guardian) can open it.
The Bottom Line
If your child was born between 2025 and 2028, making the election costs nothing, and it is the only way to receive the $1,000 pilot contribution (as long as you also activate the account). The account still follows the rules above (locked until 18, earnings taxed as ordinary income on the way out), so it is not quite free money, but for most families the election is an easy yes.
For older children who do not qualify for the government seed, the decision is more personal. The tax-deferred growth is a nice benefit, but depending on your family’s situation, you may get more mileage from a 529 or custodial account, or some combination of all three.
As always, the right answer depends on your specific financial picture. If you would like to talk through how a Trump Account fits into your family’s overall plan, we are here to help.
Jeremy Roman, EA, Owner, R Tax Services, Evansville, Indiana