Trump Accounts: What Parents & Grandparents Need to Know

What is a Trump Account?

A Trump Account is a new IRA-style account for a child under age 18. It is intended to allow long-term investment savings for the benefit of the child. For eligible children born between January 1, 2025 and December 31, 2028, the federal government may also make a one-time $1,000 contribution to the account.

Who can benefit?

• Parents who want to start long-term savings for a young child.
• Grandparents who want to make annual gifts for grandchildren.
• Family members who want to give something more meaningful than cash or toys.
• Employers who may want to contribute to accounts for employees' children, subject to the rules.
• Families who want to start retirement-style savings for a child before the child has a job.

Why the "no earned income" rule matters

This is the key benefit. Normally, a child cannot contribute to an IRA or Roth IRA unless the child has earned income, such as wages from a job. With a Trump Account, contributions during the child's growth period can be made even if the child has no wages, no job, and no earned income.

That makes this more of a family gifting and long-term investment tool. For example, instead of a grandparent giving a child $500 or $1,000 each year in cash, the grandparent may consider contributing to the child's Trump Account. Over time, those gifts could grow tax-deferred for the child's future.

Contribution limits

Contributions generally cannot begin before July 4, 2026. The general annual contribution limit is expected to be $5,000 per year during the child's growth period. This limit applies to contributions from parents, grandparents, family members, and other sources, subject to the detailed rules. Employer contributions may also be allowed, generally up to $2,500 per year, and those employer contributions count toward the overall annual limit.

How is the money invested?

During the child's growth period, the account must be invested in approved low-cost index mutual funds or ETFs that track the S&P 500 or another index made up primarily of U.S. companies.

When can the child use the money?

The account is generally locked up while the child is a minor. In most cases, funds cannot be withdrawn before January 1 of the year the child turns 18. After that point, the account is treated more like a traditional IRA, which means distributions may be taxable and may be subject to penalties unless an exception applies.

Important education planning note

A Trump Account should not automatically replace a 529 plan if the family's main goal is education funding. A 529 plan may still be the better education savings vehicle because earnings in a 529 plan can generally be withdrawn tax-free when used for qualified education expenses. Trump Accounts are more retirement-style and long-term investment oriented, not primarily education accounts.

In many cases, the best approach may be to view the Trump Account as a supplemental gift and long-term savings tool, while still using a 529 plan for college or private school planning when education is the primary goal.

Basic steps

• Determine whether the child is eligible.
• Gather the child's Social Security number and date of birth.
• Use the official IRS process and Form 4547 to elect to open the account.
• For children born from 2025 through 2028, consider whether the child qualifies for the one-time $1,000 federal contribution.
• Once contributions are allowed, coordinate family gifts so the annual contribution limit is not exceeded.
• Review how this fits with 529 plans, custodial accounts, Roth IRA planning, and the family's broader estate/gifting goals.