Understanding Trump Accounts: A New Long-Term Savings Program for Children 

Trump Accounts are newly created tax-advantaged savings and investment accounts for children under age 18, established under the One Big Beautiful Bill Act (OBBBA) passed in July 2025. Designed to encourage long-term financial security, these accounts provide an automatic government contribution along with additional opportunities for families, employers, and charities to support a child’s financial future. 

Account Eligibility & Structure 

• Available to all U.S. children under 18 with a valid Social Security Number. 

• The account is owned by the child, with a parent/guardian as custodian until age 18.

• Accounts are expected to launch July 5, 2026. 

• Accounts will initially be held with the Treasury’s designated financial agent, with potential future transfer capability to other brokerage firms. 

Account Funding 

What Families Receive 

• A one-time $1,000 government issued deposit for every eligible U.S. child born between January 1, 2025 and December 31, 2028. Contributions are not required to receive the benefit. 

Contribution Options  

• Individual contributions: 

• Optional additional contributions up to $5,000 per year can be made , indexed for inflation after 2027. Personal contributions beyond employer contributions are not tax-deductible. 

• Employer contributions: 

• Employers may contribute up to $2,500/year, which counts toward the $5,000 annual limit. 

• Employers may also offer pre-tax salary reduction contributions up to $2,500/year. 

• Other contributions: 

• Qualified charitable organizations and government entities may provide additional contributions that do not count toward the $5,000 limit. 
   

Investment Options 

Funds can be invested in a diversified, low-cost portfolio of index funds, including: 

• U.S. equity funds tracking the broad stock market 

• No leverage permitted 

• Annual fees capped at 0.10% 

In addition, the program includes a philanthropic enhancement: the Michael & Susan Dell initiative provides an extra $250 contribution for the first 25 million eligible children under age 10 living in ZIP codes with median household income below $150,000. 

Accessing the Funds 

• No withdrawals are permitted before age 18. 

• After age 18, funds may be used without penalty for qualified purposes, such as: 

• Education 

• First-time home purchase 

• Starting a business 
   

Withdrawals may be subject to restrictions.  During the growth period (prior to age 18), earnings grow tax-deferred and no distributions are allowed, except for rollovers, excess contributions, or upon death. After the growth period, when the minor has reached age 18, the portion of the account attributable to basis is tax-free. The portion of the account attributable to employer, government, or charitable contributions, and all earnings is taxed at ordinary income rates to the beneficiary. As indicated above, at age 18, the account converts to an IRA-like structure, reflecting its blend of retirement-style rules and education-focused flexibility.  

How to Enroll 

Enrollment is expected to begin in 2026: 

1. Elect enrollment when filing your tax return by submitting IRS Form 4547, or 

2. Enroll through an online portal launching summer 2026 

Differences between a Trump Account, 529 Savings Plan & Custodial/UTMA Accounts 

For families with children born between January 1, 2025 and December 31, 2028, opening a Trump Account could be a reasonable consideration to capture the $1,000 automatic government contribution. 

If the child was born outside of this window, it depends on the individual circumstances and planning objectives. You should consider the age of your child, total savings set aside for the child, and gifting goals. These accounts offer tax-deferred savings and more flexibility for withdrawals than 529 savings plans, but anything taken out of the account will be subject to ordinary income taxes at the child’s rate, while qualified distributions from 529 plans are tax-free. They should also be compared to custodial/UTMA accounts which allow grantors to give appreciated securities and are taxed at capital gains rates when withdrawn. We often find that families can be best served by using a combination of accounts to meet their needs. It is important to review your goals with your wealth consultant within the context of your financial plan to determine which account(s) are appropriate.  

Conclusion 

Trump Accounts are intended to function as a hybrid between a 529 education account and a traditional IRA, with long-term compounding as the core benefit. For families, especially those with younger children, this program may become a meaningful tool in building early financial security. 

For updates and official program details, families can visit: https://trumpaccounts.gov/ 

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The information provided is general in nature and should not be considered legal or tax advice. Consult an attorney, tax professional, or other advisor regarding your specific legal or tax situation. The items included in this publication are our opinion as of the date of this piece, not all encompassing, and are subject to change without notice. Any tax or legal advice contained in this communication is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.