What Is a Trump Account?
Trump Accounts are a new type of tax-advantaged savings account for children created under the One Big Beautiful Bill. The program becomes effective for tax years beginning after December 31, 2025.
The purpose of these accounts is to help American children begin building long-term wealth at an early age while expanding financial participation and private ownership across the country.
Below is a practical overview explaining what Trump Accounts are, how they work, and what makes them unique.
What Is a Trump Account?
A Trump Account is a specialized individual retirement account (IRA) established for the exclusive benefit of a child under age 18.
While it is not a Roth IRA, it shares some characteristics with traditional IRAs but includes additional rules designed specifically for minors. The account may be established by the Secretary of the Treasury or by a parent, guardian, or other authorized adult and must be designated as a Trump Account at the time it is opened.
Eligibility
Any child under age 18 with a valid Social Security number is eligible to have a Trump Account.
Children born between January 1, 2025, and December 31, 2028, may receive a one-time $1,000 contribution from the federal government if an election is made to establish the account.
Funding a Trump Account
Trump Accounts may receive contributions from several sources:
Federal Government Seed Funding
Children born between 2025 and 2028 may receive a $1,000 initial deposit from the U.S. Treasury.
Family, Friends, and Employers
Individuals may contribute up to $5,000 per year per child (indexed for inflation after 2027).
Employers may contribute up to $2,500 annually on behalf of an employee’s child. These employer contributions are excluded from the employee’s gross income.
Charities, Philanthropists, and State Governments
Charitable organizations, philanthropists, and state governments may make contributions on behalf of groups of eligible children. These contributions are not subject to the $5,000 annual limit provided they apply to a defined class of children, such as all children born in a particular year or all children residing in a state.
Investment Requirements
Funds held in a Trump Account must be invested in eligible investments until the child reaches age 18.
Eligible investments include mutual funds or exchange-traded funds (ETFs) that:
· Track a broad, diversified index of primarily U.S. companies (such as the S&P 500)
· Do not use leverage
· Maintain very low fees (no more than 0.1% annually)
Sector-specific or industry-specific funds are not permitted.
Withdrawal Rules
Withdrawals are not permitted before the year the beneficiary turns 18, except for certain rollovers (such as transfers to another Trump Account or to an ABLE account for a disabled beneficiary).
After age 18, the account is treated similarly to a traditional IRA and becomes subject to the standard IRA rules regarding withdrawals, taxes, and penalties.
Withdrawals before age 59½ are generally subject to ordinary income tax and a 10% early-withdrawal penalty unless an exception applies. Common exceptions include:
· Qualified higher education expenses
· First-time home purchases (up to $10,000)
· Other standard IRA exceptions
Tax Treatment
Contributions
· Contributions from parents, relatives, and friends are made with after-tax dollars and are not tax-deductible.
· Employer contributions (up to $2,500 annually) are excluded from the employee’s taxable income.
· Contributions made by charities, states, or the federal government are not included in the child’s taxable income.
Investment Growth
Investment earnings grow tax-deferred. Taxes are not owed until funds are withdrawn.
Withdrawals
After age 18, withdrawals follow traditional IRA rules. Contributions are not taxed again, but earnings are taxed as ordinary income when distributed, unless an exception applies.
Why Trump Accounts Matter
Trump Accounts are designed to expand access to long-term wealth-building opportunities for American children.
Key benefits include:
Universal Access
Any child under age 18 with a Social Security number can have a Trump Account regardless of family income.
Early Wealth Accumulation
The government’s $1,000 seed contribution, combined with additional family or employer contributions, can grow significantly over time through long-term compounding.
Financial Literacy
These accounts provide young Americans with early exposure to investing and long-term financial planning.
Broader Economic Participation
The policy aims to increase private ownership by encouraging every American to participate in long-term investment growth.
How to Open a Trump Account
The IRS has released Form 4547, which can be filed with your 2025 tax return or submitted online through the Trump Accounts portal.
For children born between 2025 and 2028, the $1,000 government contribution can be claimed by selecting the appropriate election on the form or through the online application.
If you would like Royce A. Belcher, CPA, PLLC to prepare and file Form 4547 on your behalf, please contact us before your tax return is filed. Let us know which children you would like accounts established for and who will serve as the account custodian.
A preparation fee will apply.
Conclusion
Trump Accounts introduce a new approach to long-term savings for American children. By combining government seed funding, tax-deferred investment growth, and contributions from families, employers, and charitable organizations, these accounts are designed to help the next generation build financial security from an early age.