When planning for a child’s future, families often consider savings and investment options such as 529 plans, custodial accounts, and traditional savings accounts. Now, Trump Accounts add another option to the financial planning toolkit.
Who Can Open a Trump Account?
A Trump Account can be opened by a parent, guardian, or other authorized individual for a child. To open a Trump Account, the child must:
- Have a valid Social Security number
- Be under age 18 as of December 31 of the year the account is established
Family members, including parents and grandparents, can contribute to the account over time. Certain employers and organizations may also contribute, and eligible children may qualify for a one-time $1,000 federal contribution to help jump-start long-term investing.
Children do not have to be U.S. citizens to own a Trump Account, although citizenship may be required to receive certain government contributions. Before opening an account, families should review the eligibility rules and determine whether it aligns with their long-term savings goals.
Eligible Children May Receive a $1,000 Head Start
One of the most notable features of Trump Accounts is the opportunity for eligible children to receive a one-time $1,000 federal contribution. Children born between January 1, 2025, and December 31, 2028 may qualify if they are U.S. citizens, have a valid Social Security number, and meet other program requirements. The contribution is deposited directly into the child’s account and does not reduce the amount family members can contribute.
Example
If Olivia is born in 2026 and qualifies for the program, her Trump Account could receive a $1,000 federal contribution before her family contributes any additional funds.
Why It Matters
Starting with an initial investment can give savings more time to grow through the power of compounding, helping build a stronger financial foundation for the future.
Who Can Contribute to a Trump Account?
One of the key benefits of a Trump Account is that family members and others can work together to build a child’s savings. Contributions may come from parents, grandparents, relatives, friends, employers, and even the child. Unlike a traditional IRA, the child does not need earned income to receive contributions. For 2026, total private contributions are generally limited to $5,000 per child annually, regardless of how many individuals contribute. Certain employers may also contribute through a qualifying employer program. In many cases, employer contributions are not included in the employee’s taxable income, but they generally count toward the child’s annual contribution limit. Employers may contribute up to $2,500 per employee each year through a qualifying program.
Example
A child’s parents contribute $2,000 during the year, and grandparents contribute another $3,000, reaching the annual $5,000 contribution limit.
In another scenario, an employer contributes $1,500 to an employee’s child’s Trump Account as part of a company benefit program, helping grow the account while generally avoiding current income tax for the employee. Other family members can contribute up to $3,500, for a total of $5,000.
Why It Matters
Trump Accounts provide a way for families, employers, and others to invest in a child’s future and help build long-term financial security.
Government and Charitable Contributions
Certain government agencies and charitable organizations may also contribute to Trump Accounts. Under IRC § 530A(f), governments may make contributions for groups of eligible children, such as children living in a particular state or children born during certain years. Organizations described in IRC § 501(c)(3) may also be able to make contributions under specific rules. These contributions generally do not count toward the child’s annual $5,000 private contribution limit. As of August 2026, qualified government agency and charitable agency contributions have no specified annual limit.
Why It Matters
These contributions can provide an added boost to a child’s long-term savings and investment growth without reducing the amount that families and other contributors can add to the account.
How Are Trump Accounts Taxed?
One important consideration is that contributions to a Trump Account are generally not tax deductible. In other words, parents, grandparents, and other contributors cannot reduce their current taxable income by contributing to the account.
Example
If a parent contributes $2,000 to a child’s Trump Account, that contribution generally does not provide an immediate tax deduction.
The primary tax advantage comes from tax-deferred growth. Investment earnings within the account generally are not taxed each year while they remain invested, allowing contributions and earnings to potentially compound over time.
Why It Matters
Although contributors do not receive an upfront tax benefit, the ability to grow investments on a tax-deferred basis may help increase long-term savings and support a child’s future financial goals.
How Can the Money Be Invested?
Trump Accounts are designed to encourage long-term investing rather than short-term speculation. Account assets generally must be invested in low-cost, diversified index funds that track broad U.S. stock market indexes, such as the S&P 500. Investments in individual stocks and certain higher-risk assets are generally not permitted while the child is a minor.
Example
A child receives $20,000 in contributions over several years. By the time they reach adulthood, the account has grown to $35,000. The investment earnings generally are not taxed while they remain in the account, allowing the balance to continue growing on a tax-deferred basis.
Why It Matters
Keeping investment earnings sheltered from current taxation may improve long-term growth potential.
Can Money Be Taken Out Before Age 18?
Generally, no. Under IRC § 530A, withdrawals are typically not allowed while the child is under 18. This encourages families to keep the money invested for the long term.
There are limited exceptions for certain qualified rollovers.
What Happens When the Child Turns 18?
The special Trump Account rules generally end at the beginning of the year the child turns 18.
At that point, the account generally begins operating under the traditional IRA rules found in IRC § 408.
The account holder gains greater control over the account and may have additional investment options available.
The account can continue to grow on a tax-deferred basis, and future contributions generally follow the same rules that apply to other traditional IRAs.
Why Trump Accounts Matter
The biggest advantage of a Trump Account is time.
A child who begins investing shortly after birth may have decades for contributions and investment earnings to grow through compounding. Even small contributions made early in life can potentially grow into a meaningful financial resource over time.
Example
Suppose a child receives the $1,000 federal contribution and family members add modest annual contributions throughout childhood. By the time the child reaches adulthood, those contributions may have had many years to grow through investment earnings.
Bottom Line
Trump Accounts are designed to help children start building wealth early in life. Under IRC § 530A, families can contribute on behalf of a child even if the child has no earned income. Eligible children may also receive a one-time $1,000 federal contribution under IRC § 6434.
While contributions generally are not deductible, the account offers the potential for decades of tax-deferred growth. For many families, that combination of early investing and long-term compounding may be the most valuable feature of all.
A child’s greatest investing advantage is time. Trump Accounts are designed to put that advantage to work from the very beginning.
About McConnell Jones
Founded in 1987, McConnell Jones (MJ) is a nationally recognized CPA firm delivering Assurance, Tax & Accounting, and Advisory services across a broad range of industries. Headquartered in Houston, Texas with offices in Washington, DC; Dallas and Austin, Texas; Durham, North Carolina; and Atlanta and Columbus, Georgia, MJ provides integrated, high-quality solutions backed by specialized expertise and a client-focused approach.
Source(s):
Trump Accounts | Internal Revenue Service
Tax Disclaimer: This communication is for general informational purposes only and is not intended as tax advice. Application of tax laws depends on specific facts and circumstances. Please consult your tax advisor before taking action.