At a Glance
Trump Accounts are tax-deferred investment accounts designed to help families save and invest for children over the long term. They became available in July 2026 and may be funded by parents, grandparents, employers, charities, government entities, and, in certain cases, the federal government.
These accounts are not intended to replace 529 plans, custodial accounts, or retirement accounts funded with earned income. Instead, they may provide an additional option for families seeking to establish long-term savings for a child.
Key Takeaways
- Eligible children may receive a one-time $1,000 federal seed contribution if they were born between January 1, 2025, and December 31, 2028, and the family affirmatively enrolls.
- Up to $5,000 annually may be contributed from individuals and employers combined, with inflation indexing scheduled to begin in 2028.
- Employer contributions of up to $2,500 per employee annually may be made through a qualifying Section 128 program.
- Before age 18, investments are limited to certain low-cost, non-leveraged U.S. equity index funds.
- Funds generally cannot be withdrawn before the end of the year in which the child turns 17, after which the account converts to a traditional IRA.
Who Is Affected
Trump Accounts may affect:
- Parents, grandparents, and other family members saving for children
- Eligible children under age 18 who are U.S. citizens or resident aliens with valid Social Security numbers
- Employers considering contributions through qualifying employee-benefit programs
- Charities and government entities interested in supporting long-term savings for children
- Families seeking to supplement education, retirement, or other long-term savings strategies
Eligibility and Key Requirements
Eligibility Requirements
To establish a Trump Account, an eligible child generally must:
- Be under age 18 for the entire contribution year
- Have a valid Social Security number
- Be a U.S. citizen or resident alien
- Have no other Trump Account established in the child’s name
Only one Trump Account may be established for each child.
The account is owned by the child but managed by an authorized adult until the child reaches age 18.
Limits, Thresholds, and Phaseouts
The annual contribution limit is $5,000 from individual and employer contributions combined. This limit is scheduled to begin indexing for inflation in 2028.
Contribution limits and treatment vary by contributor:
- Parents, grandparents, and other individuals: Contributions are made with after-tax dollars and count toward the $5,000 annual limit.
- Employers: Employers may contribute up to $2,500 per employee annually through a qualifying Section 128 program. These contributions count toward the $5,000 annual limit.
- Governments and qualified charities: Contributions generally do not count toward the annual $5,000 limit.
- Federal seed contribution: The one-time $1,000 federal contribution does not count toward the annual contribution limit.
Eligible children born from January 1, 2025, through December 31, 2028, may qualify for a one-time $1,000 federal seed contribution. Enrollment and election of the contribution are required; the contribution is not automatic.
Exclusions and Special Rules
Before age 18, account funds may be invested only in certain low-cost, non-leveraged U.S. equity index funds. Eligible funds must track an index composed primarily of U.S. companies and generally may not charge annual fees exceeding 0.10%.
Funds generally cannot be withdrawn before the end of the year in which the child turns 17. A limited exception allows certain beneficiaries with disabilities to roll the account into an ABLE account.
After the growth period ends, the account converts to a traditional IRA, and the beneficiary assumes control. At that point, a broader range of IRA investment options is available, and standard IRA distribution rules generally apply.
The tax treatment of distributions depends on the source of the funds:
- After-tax contributions made by family members may generally be withdrawn tax-free
- Investment earnings, appreciation, government contributions, charitable contributions, and other tax-free contributions are generally taxed as ordinary income when distributed
After conversion to a traditional IRA, funds may potentially be used for higher education expenses, certain first-time homebuyer costs, business purposes, or retirement, subject to applicable IRA rules and potential early-withdrawal penalties.
Documentation and Reporting
Families should retain records supporting:
- The child’s eligibility, including age, Social Security number, and citizenship or resident-alien status;
- Account enrollment and the election for any federal seed contribution;
- Annual contributions by individuals, employers, charities, and government entities;
- Employer contributions made through a qualifying Section 128 program;
- Investment activity;
- Any rollover to an ABLE account; and
- Distributions and the source of funds distributed.
Enrollment for the federal seed contribution may be completed through IRS Form 4547, the IRS Individual Online Account portal, or trumpaccounts.gov.
Effective Dates
- July 2026: Trump Accounts became available.
- January 1, 2025, through December 31, 2028: Children born during this period may qualify for the one-time $1,000 federal seed contribution, if the family enrolls and makes the required election.
- 2028: The $5,000 annual contribution limit is scheduled to begin adjusting for inflation.
The article does not identify an expiration date for Trump Accounts.
Planning Considerations
Families should consider how a Trump Account fits within their broader savings strategy. A 529 plan may remain more favorable when education is the primary goal because qualified education distributions are tax-free and contribution limits may be substantially higher.
A custodial Roth IRA may remain an attractive option for a child with earned income because qualified distributions may be tax-free. Trump Account contributions do not reduce the amount a working child may contribute to a separate traditional or Roth IRA.
Before contributing, families should consider the account’s limitations, including restricted investment choices before age 18, limited access to funds before age 18, and the potential taxation of earnings and certain contributions upon distribution.
Families should also consider that Trump Accounts are treated as student-owned assets for federal financial-aid purposes, which may be less favorable than a parent-owned 529 plan.
Employers considering contributions should evaluate whether a qualifying Section 128 program is available and how employer contributions fit within the $5,000 annual contribution limit.
Example
A child is born in 2026, has a valid Social Security number, and is a U.S. citizen. The child’s family enrolls in a Trump Account and affirmatively elects the federal seed contribution.
The child may qualify for the one-time $1,000 federal contribution. During the year, the child’s parents contribute $3,000 and an employer contributes $2,000 through a qualifying Section 128 program. The combined individual and employer contributions equal the $5,000 annual limit.
The family cannot generally withdraw the funds before the end of the year in which the child turns 17. Once the account converts to a traditional IRA, the child assumes control and standard IRA distribution rules apply.
Next Steps
- Confirm whether the child meets the age, Social Security number, and citizenship or resident-alien requirements.
- For eligible children born from January 1, 2025, through December 31, 2028, consider enrolling and electing the $1,000 federal seed contribution.
- Coordinate planned family and employer contributions to remain within the annual $5,000 limit.
- Compare the potential role of a Trump Account with other savings options, including 529 plans, custodial accounts, and Roth IRAs for children with earned income.
For additional information about Trump Accounts and how they may fit alongside your family’s education, retirement, and estate-planning strategies, contact your RKL advisor.
Frequently Asked Questions
Who can have a Trump Account?
An eligible child generally must be under age 18 for the entire contribution year, have a valid Social Security number, and be a U.S. citizen or resident alien. Only one Trump Account may be established for each child.
What is the annual contribution limit?
Up to $5,000 may be contributed annually from individuals and employers combined. The limit is scheduled to begin adjusting for inflation in 2028.
Who may contribute?
Parents, grandparents, other individuals, employers, charities, government entities, and, for eligible children, the federal government may contribute. Different limits and tax treatment apply depending on the contributor.
Can funds be withdrawn before age 18?
Generally, no. Funds cannot be withdrawn before the end of the year in which the child turns 17. A limited exception permits certain beneficiaries with disabilities to roll the account into an ABLE account.
How are distributions taxed?
After-tax contributions made by family members may generally be withdrawn tax-free. Investment earnings, appreciation, government contributions, charitable contributions, and other tax-free contributions are generally taxed as ordinary income when distributed.
How does a Trump Account compare with a 529 plan?
A Trump Account may complement a 529 plan but does not replace it. A 529 plan may remain more favorable when education is the primary goal because qualified education withdrawals are tax-free and contribution limits may be higher.
