Trump Accounts: A New Vehicle for Long-Term Savings

Originally published in July 2025, this article was updated in January 2026 to reflect newly available information.

As part of the One Big Beautiful Bill Act (OBBBA), Congress has introduced a new savings vehicle known as Trump Accounts, officially referred to as Individual Trust Accounts. These accounts are designed to promote long-term savings for children starting at birth, with favorable tax treatment and unique contribution and funding rules. While similar in structure to traditional IRAs, Trump Accounts come with their own set of features tailored to encourage early investing and build financial security over time.

Who Can Have a Trump Account?

Trump Accounts may be established for any child under the age of 18 who has a Social Security number.

A Trump Account may only be established by an authorized individual, which is defined as the child’s 1) legal guardian, 2) parent, 3) adult sibling or 4) grandparent, in that order. In the event the authorized individual is both establishing the Trump Account and making an election to receive the pilot program contribution, an authorized individual is someone who anticipates that the child will be his or her qualifying child for the tax year in which the election is made.

An election to receive a pilot program contribution of $1,000 may be made at the same time as the election to open the account. Both the initial election and the pilot program election can be made on IRS Form 4547 or through an online tool or application which is anticipated to be released in the middle of 2026.

Contributions

The annual contribution limit for Trump Accounts is $5,000 per child per year (indexing for inflation begins in 2028). Contributions are not deductible. Unlike a traditional or Roth IRA, there is no earned income requirement.

Note: If an individual is eligible to contribute to both a Trump Account and a traditional or Roth IRA—for example, the individual is under the Trump Account age limit and has enough earned income to qualify for IRA contributions—he can fund both accounts. Contributions to one do not reduce the amount the individual can contribute to the other.

Other contribution considerations include:

• Contribution Window: Contributions are only permitted until the year before the child turns 18.
• No contributions can be made before July 4, 2026.

Funding Sources

• Individuals: Parents, grandparents, or other individuals may contribute on behalf of a child.
• Federal Pilot Program: The Treasury will make a one-time $1,000 government-funded contribution for any U.S. citizen child born from 2025 through 2028. This amount does not count against the $5,000 annual limit. An election to receive a pilot program contribution of $1,000 may be made using IRS Form 4547 at the same time as the election to open the account.
• Employers: Employers may contribute up to $2,500 annually (indexed for inflation beginning in 2028) per eligible employee or employee’s dependent. These contributions are tax-free to the employee. Employer contributions count against the $5,000 annual limit.
• Qualified General Contributions: Governments or 501(c)(3) organizations may contribute to a class of eligible minors (e.g., all children born in a given year in a geographic region). These contributions do not count against the $5,000 annual limit.

Investments

Accounts must be invested in mutual funds or ETFs that track a broad-based U.S. equity index (e.g., S&P 500) and charge no more than 0.10% in annual fees. Sector-specific or leveraged funds are not allowed. Once an account beneficiary turns age 18, the account is permitted to utilize any investment that is allowed in an IRA.

Distributions & Tax Treatment

Distributions are not permitted until the year the child turns 18, except to roll over the entire account balance into a 529A ABLE account in the year the beneficiary turns 17, assuming the beneficiary qualifies due to disability.

A parent or guardian can move financial institutions, select the trustee, and choose from eligible investments by creating a second Trump Account (called a rollover Trump Account) and initiating a trustee-to-trustee transfer of the entire account balance from the child’s existing Trump Account. Once a beneficiary turns age 18, the Trump account is treated as a traditional IRA and is subject to the same rules as other traditional IRAs.

Withdrawals for qualified expenses (e.g., higher education expenses, first-time home purchase, or small business expenses) avoid the standard 10% early withdrawal penalty. Otherwise, Trump Accounts receive similar tax treatment as a traditional IRA with respect to distributions.

• Contributions made by individuals (e.g., parents) are included in the child’s basis and not taxed again at distribution.
• Contributions made by the government, employers, or nonprofits are fully taxable when distributed.
• If a Trump Account beneficiary dies before turning 18, the account will be treated as an inherited IRA.

Trump Accounts offer a new tax-advantaged way to save for a child’s future, but they should be evaluated alongside other established savings vehicles. Depending on your goals, 529 plans and Roth IRAs may offer more favorable tax treatment. Consider the purpose of the funds, contribution limits, and withdrawal rules when determining the most appropriate strategy for your family. We’ve included a side-by-side comparison below to help you evaluate how Trump Accounts stack up against other tax-advantaged options like 529 plans and Roth IRAs.

Actions to Consider Now

Although Trump Accounts introduce an appealing new way to invest in a child’s future, they are not yet available. Contributions cannot begin until 12 months after the enactment of the One Big Beautiful Bill Act. Until then:

• Continue funding existing vehicles such as 529 plans or custodial Roth IRAs where appropriate.
• Review your savings strategy for children and grandchildren to determine how a Trump Account might fit alongside other tools.
• Talk to your advisor to determine how Trump Accounts could impact your long-term education, legacy, or tax planning strategies.

Closing Thoughts

With the ability to receive contributions from families, employers, and even public entities, Trump Accounts offer a flexible platform for building a child’s financial foundation. Still, these new tax-advantaged accounts are just one tool in a broader savings toolkit. Families should carefully consider their unique goals—whether focused on education, retirement, or legacy—when determining how these accounts might complement or enhance their overall financial strategy.

This information is believed to be accurate at the time of publication but should not be used as specific investment or tax advice as opinions and legislation are subject to change. You should always consult your tax professional or other advisors before acting on the ideas presented here.