Trump Accounts: A New Head Start for America's Children What Every Parent Needs to Know About the New Federal Savings Program

What Are Trump Accounts?

Trump Accounts are tax-advantaged long-term savings and investment accounts for children under 18 years old, created under the One Big Beautiful Bill Act (OBBBA) passed in July 2025. Think of them as a new custodial-style traditional IRA for minors — owned by the child but administered by an adult.

You could almost think of a Trump Account as a cross between a traditional IRA and a 529 savings account. Like an IRA, earnings can grow tax-deferred and eligible withdrawals are generally taxed at the beneficiary's income tax rate. But unlike an IRA, there's no requirement for the child to have earned income in order to contribute.

"The government contribution is a great perk, but the absence of an earned-income requirement is even more exciting," says Hayden Adams, CPA, CFP®, director of tax planning and wealth management research at the Schwab Center for Financial Research. "Now, you can help your child start saving for retirement as soon as they're born rather than waiting until they get a job."

The $1,000 Head Start

One of the program's most headline-grabbing features is free federal money. The account features a pilot program contribution of $1,000 for children born between January 1, 2025, and December 31, 2028, who are U.S. citizens with a valid Social Security number.

This $1,000 deposit doesn't count toward the $5,000 annual contribution limit, meaning families can still contribute the full amount on top of the federal grant.

Beyond the federal contribution, charitable organizations are also stepping up. Up to 25 million children age 10 or younger who live in qualifying ZIP codes may receive a $250 charitable gift deposit from the Michael & Susan Dell Foundation. Additionally, Dalio Philanthropies pledged to provide $250 deposits for eligible children in Connecticut, and more organizations may sign on for similar charitable gifts in the future.

Who Is Eligible?

Children under age 18 with a Social Security number are eligible for Trump Accounts. While parents or guardians are the ones who open and manage the account, the child is considered the account owner and will take full control once they reach age 18. There are no income threshold requirements for a parent or guardian to open the account.

How Much Can You Contribute?

Individuals and employers can contribute up to a total of $5,000 per child per year. Unlike other types of IRAs, Trump Accounts do not require individuals to have earned income or restrict contributions based on total income.

Employers may contribute up to $2,500 annually to an employee's or the employee's dependent's Trump Account, if they formally establish an employer-sponsored plan. These contributions count toward the yearly limit but are not considered taxable income for the employee.

Additional contributions may be available from government entities and charitable organizations, which do not count toward the $5,000 contribution limit.

Tax Benefits

The accounts are tax-deferred, so money grows without being taxed until it's withdrawn. After-tax contributions that are withdrawn will be tax-free, since taxes have already been paid on those assets. Pre-tax amounts — including earnings from investments, the $1,000 federal contribution, and employer contributions — will generally be taxed at the beneficiary's ordinary income tax rate when withdrawn.

Crucially, annual contributions to Trump Accounts do not affect how much a child can contribute to other IRAs. For example, teenagers with jobs may have earned income that allows them to contribute to a traditional or Roth IRA — which does not reduce the amount they can contribute to a Trump Account for that year.

Investment Rules

Funds in a Trump Account may be invested only in eligible investments — generally low-cost stock index mutual funds or ETFs whose underlying securities are composed of predominantly U.S.-based companies, with annual fees and expenses of less than 0.1% of the fund balance. This keeps costs down and ensures steady, long-term growth potential for children.

Withdrawal Rules

Generally, no withdrawals are allowed from a Trump Account. Once the beneficiary turns 18, the Trump Account will need to be converted to an IRA — at which point standard IRA withdrawal rules apply. Early withdrawals before age 59½ may be subject to a 10% penalty. Eligible disabled children may also be permitted to roll their Trump Accounts into an ABLE account.

The Long-Term Growth Potential

The real power of these accounts lies in the magic of compound growth over decades. Assuming a 2026 government contribution of $1,000 and a parental contribution of $5,000, followed by annual contributions of $5,000 adjusted for inflation beginning in 2028, and investment growth of 6.0% with dividends and interest reinvested, the potential for substantial growth by adulthood is significant.

Contributed funds may grow substantially by the time a child turns 18, especially for those who receive the $1,000 pilot contribution from the federal government. Contributions from sources outside the household — including employers, governments, and charitable organizations — can further enhance a child's long-term financial position.

How to Open a Trump Account

You may be able to open a Trump Account by filing IRS Form 4547 or through the online portal at trumpaccounts.gov. You may want to consider filing Form 4547 with your 2025 tax return, so your account is available for use in July 2026.

All Trump Accounts will first be created and held with the U.S. Treasury Department's designated financial agent. Later, you may be able to transfer the full balance to your preferred financial institution through a trustee-to-trustee transfer. If your child is eligible and a Trump Account has been opened, the Treasury Department will deposit the $1,000 seed contribution no earlier than July 4, 2026.

How Trump Accounts Compare to Other Options

Trump Accounts are not meant to replace existing savings vehicles but to complement them. 529 Plans remain the most tax-efficient way for parents to save for their children's education. Custodial accounts are flexible in terms of spending but don't benefit from tax-deferred growth. Trump Accounts offer universal eligibility for children under 18, with tax-deferred growth through low-cost index funds.

The key distinction is purpose: Trump Accounts are designed for long-term financial security and retirement savings, while 529s are education-focused and custodial accounts offer more spending flexibility.

The Bottom Line

Trump Accounts represent a meaningful new tool for American families to build generational wealth. They provide an opportunity for children and their families to gain real-world experience with saving and investing. For families with newborns eligible for the $1,000 federal grant, it's essentially free money with decades of growth ahead of it. For all other children under 18, the tax-deferred structure, flexible contribution sources, and low-cost investment requirements make this a compelling addition to any family's financial planning toolkit.

With accounts opening on July 4, 2026, now is the time to start planning.