A child generally qualifies if he or she: - Is under age 18 when the account is established, and - Has a valid Social Security number. Although the law became effective after December 31, 2025, contributions cannot begin until July 4, 2026, one year after the legislation was enacted.

Trump Accounts Explained: A New Tax-Advantaged Savings Opportunity for Children

Q: How Much Can Be Contributed?

For most families, annual contributions are limited to: - $5,000 per child, beginning in 2026 - The limit will eventually increase for inflation. Certain special contributions—such as government pilot program deposits and qualified rollovers—do not count toward this annual limit.

Trey Whitt
2 days ago
3 min read

The recently enacted One Big Beautiful Bill Act introduced a brand-new savings vehicle called the Trump Account. Beginning in 2026, these accounts will allow families to start building retirement savings for children long before they begin working.

While the rules are different from traditional IRAs in several important ways, Trump Accounts may become an attractive planning tool for parents, grandparents, and even employers.

Here's what you need to know.

What Is a Trump Account?

A Trump Account is a tax-advantaged investment account established for a child under age 18.

Think of it as a traditional IRA designed specifically for minors. Contributions are not tax deductible, but investment earnings grow tax deferred, potentially allowing decades of compounded growth before retirement.

Unlike a traditional IRA, a child does not need earned income to receive contributions while under age 18.

Who Is Eligible?

A child generally qualifies if he or she:

Is under age 18 when the account is established, and
Has a valid Social Security number.

Although the law became effective after December 31, 2025, contributions cannot begin until July 4, 2026, one year after the legislation was enacted.

How Much Can Be Contributed?

For most families, annual contributions are limited to:

$5,000 per child, beginning in 2026
The limit will eventually increase for inflation.

Certain special contributions—such as government pilot program deposits and qualified rollovers—do not count toward this annual limit.

The $1,000 Government Contribution

One of the most publicized features of the legislation is a temporary federal pilot program.

Children born between January 1, 2025, and December 31, 2028 may qualify for a $1,000 contribution funded by the U.S. Treasury, provided certain eligibility requirements are met.

This government contribution is intended to give eligible children a head start on long-term retirement savings.

What Can the Money Be Invested In?

Investment options are intentionally limited.

Before age 18, Trump Accounts generally may invest only in low-cost diversified index funds or ETFs that:

Track broad U.S. stock market indexes (such as the S&P 500)
Do not use leverage
Have annual expenses of no more than 0.10%

Individual stocks, cryptocurrency, and specialized sector funds are generally not permitted.

Can the Money Be Withdrawn?

Generally, no.

The account is designed to encourage long-term saving, so distributions are generally prohibited until the year the child turns 18, except for a few limited situations such as correcting excess contributions or certain qualified rollovers.

Once the child reaches adulthood, the account is generally treated like a traditional IRA, meaning withdrawals may be taxable and could be subject to early withdrawal penalties if taken before retirement age.

Are Contributions Tax Deductible?

No.

Unlike contributions to many traditional IRAs, contributions made while the beneficiary is under age 18 do not generate a current tax deduction.

Instead, the primary benefit is decades of tax-deferred investment growth.

Can Employers Contribute?

Yes.

Employers may establish programs allowing contributions to employees' children's Trump Accounts.

Beginning in 2026, employers generally may contribute up to $2,500 per employee each year, with those contributions excluded from the employee's taxable income (subject to applicable rules and future inflation adjustments).

This feature could eventually become an attractive employee benefit for businesses looking to support young families.

How Do Trump Accounts Compare to 529 Plans?

Trump Accounts and 529 plans serve different purposes.

Trump Account 529 Plan

Intended primarily for retirement savings Intended primarily for education expenses

Tax-deferred growth Tax-free growth when used for qualified education expenses

No tax deduction for contributions State tax benefits may be available in some states

Investments limited to low-cost index funds Broader investment options

Funds generally unavailable until adulthood Funds available for qualified education expenses

For many families, these accounts may complement—not replace—each other.

Bottom Line

Trump Accounts are a new addition to the financial planning landscape and offer families another way to build long-term wealth for children. Their greatest advantage is the potential for decades of tax-deferred investment growth, especially when contributions begin early in a child's life.

That said, they aren't the right solution for every family. The accounts offer no upfront tax deduction, investment choices are intentionally limited, and funds generally cannot be accessed until the child reaches adulthood.

As with any new legislation, additional IRS guidance is expected, and the rules may continue to evolve over the coming months.

If you'd like to discuss whether a Trump Account makes sense as part of your family's overall financial plan, we'd be happy to help.