You may have seen recent news coverage about Trump Accounts. Below is a brief overview of how these new accounts work and some of the key planning considerations for families.
What is a Trump Account?
Trump Accounts are new tax-advantaged investment accounts designed to help children build long-term savings from an early age.
Under current federal guidance, contributions can be made after July 4, 2026 for any child under 18 with a valid Social Security number.
Additionally, children born between January 1, 2025 and December 31, 2028 may be eligible for a one-time $1,000 federal seed contribution deposited by the U.S. Treasury once the account is established.
Funds in the account will be invested in a low-cost diversified index fund tracking U.S. companies. The goal is long-term growth through broad market exposure.
At age 18, the account transitions into a traditional IRA, subject to applicable IRA tax rules and withdrawal restrictions at that time.
How to Sign Up
Parents or guardians can open a Trump Account through the official government portal at TrumpAccounts.gov or by filing IRS Form 4547 with your tax return.
The account is initially established under U.S. Treasury oversight, and eligible seed funding is deposited once the account is opened.
Additional guidance indicates that accounts may later be moved to approved financial institutions such as Charles Schwab.
Contributions
Anyone may contribute to a child’s Trump Account, including:
- Parents
- Grandparents
- Friends and family
- Employers
Current key rules:
- Annual contribution limit: up to $5,000 per child
- Contributions from individuals are not tax deductible
- Employer contributions (up to $2,500 annually) may be tax deductible to the employer.
All contributions are subject to IRS rules and annual limits, which may be adjusted over time.
Key Takeaways
Trump Accounts are designed to provide children with an early start in long-term investing, combining features of custodial accounts and retirement-style tax treatment.
Unlike 529 plans, they are not limited to education expenses, offering more flexibility in how funds may eventually be used. This, of course, comes with different tax treatment which may not provide as much advantage.
Since they are new, there is still continued guidance being issued on these accounts by the IRS.
We believe these accounts can be a beneficial tool for long-term planning strategies, including potential Roth conversions, family tax strategies, and gifting strategies. Please let Steve, Chase, or myself know if you are interested in how these account may work within your plan.
Written by:
Jacob O'Connell
Investment Advisor Representative
