The latest tax reform bill introduced a brand-new savings vehicle called the Trump Account — a government-facilitated investment account designed specifically for children under 18. While the name may grab headlines, the substance is a powerful tool for long-term investing and could reshape how parents save for their children.
Here’s what families (and employers) need to know.
What Is a Trump Account?
A Trump Account is a type of government-supported individual retirement account (IRA) created for minors. It acts like a traditional IRA, but with special rules for young beneficiaries and contributions from parents, employers, and even nonprofits.
Unlike 529 college savings plans or custodial brokerage accounts, Trump Accounts are:
Simple to open (can be set up by the IRS or parents)
Restricted to low-cost U.S. stock index funds
Locked until the child turns 18
Tax-deferred, and in many cases, tax-exempt
Who Can Open One?
Children under 18 are automatically eligible if they:
Are U.S. citizens with a Social Security number
Have no prior Trump Account on file
Accounts can be established:
Automatically by the IRS
By parents or guardians
For newborns under the pilot program (see below)
✅ Contributions allowed:
Up to $5,000/year (indexed for inflation after 2027)
No tax deduction for these contributions
No withdrawals until age 18 (with very few exceptions)
🚫 Not allowed:
Investments outside of approved low-cost ETFs or mutual funds
Withdrawals before age 18 (except for death, disability, or rollovers)
What Investments Are Allowed?
Funds in Trump Accounts can only be invested in:
U.S. equity index mutual funds or ETFs
Funds with no leverage
Funds with fees under 0.1%
Think: S&P 500 ETFs, total stock market funds — simple, transparent, and low-cost.
Employer Contributions Allowed
Employers can contribute up to $2,500 per year to a Trump Account for an employee’s child. These contributions:
Are not taxable to the employee
Must be made through a compliant “Trump Account Contribution Program”
Are subject to annual inflation adjustments after 2027
This offers a new way for companies to offer family-forward benefits and support employee retention.
Contributions from Nonprofits or Tribal Governments
Charities, tribal governments, and local/state governments can also contribute through a “general funding contribution” — a kind of matching grant to a class of kids (e.g., all children born in 2026 in a certain ZIP code).
These contributions are not included in taxable income, either for the donor or the child.
The Trump Accounts Pilot Program: $1,000 for Babies
One of the most headline-grabbing features is a $1,000 tax-funded contribution for children born between 2025 and 2028, if their parent opts in. Key facts:
Parents can elect this benefit via a simple IRS form
Money is deposited directly into a Trump Account for the newborn
One-time per child
Not subject to tax offset, garnishment, or repayment
Must include the child’s Social Security number
Program is fully funded through 2034 ($410 million appropriated)
Rollovers and Special Rules
Trump Accounts also support:
Rollover to ABLE accounts (for children with disabilities)
Rollover between Trump Accounts
Refunds of excess contributions, with penalties on the earnings portion
If a child dies before age 18, the account passes to their estate or heir, with regular tax rules applying.
Required Reporting
Account trustees (typically banks or brokers) must report:
All contributions over $25 (unless from a parent or the government)
Distributions
Investment details and balances
This ensures transparency and tracks government-funded contributions.
While the Trump Account name may stir political reactions, the program itself is a serious policy tool for encouraging long-term investment habits, especially among middle- and lower-income families.
If you have young children — or plan to — this account offers a simple, structured way to:
Build long-term tax-free wealth
Receive free seed funding if your child is born in 2025–2028
Encourage low-cost investing from a young age
We’ll keep you posted as more details and IRS guidance are released.