When the One Big Beautiful Bill Act (OBBBA) was signed into law on July 4, 2025, it introduced a new savings and investment vehicle known as Trump Accounts.  These accounts are designed to help children start building long-term wealth from an early age, with features that support financial literacy, disciplined saving, and early exposure to investing.

More than just another tax-advantaged account, Trump Accounts reflect a broader policy effort to encourage families to think generationally about money, fostering habits and strategies that can support future financial independence.

In this article, we outline the key details:

• What Trump Accounts are
• Who can open and fund them
• Contribution limits and timing
• Where accounts can be opened
• Tax treatment of contributions and withdrawals

Whether you’re a parent, grandparent, or advisor helping clients plan for the future, understanding how Trump Accounts work can open the door to meaningful long-term benefits.

What Are Trump Accounts?

Trump Accounts are a newly created type of tax-advantaged investment account established under the OBBBA. They are structured similarly to an Individual Retirement Account (IRA) but are designed specifically for children under age 18.

These accounts are held in the child’s name, with a parent or legal guardian serving as the custodian until the child reaches adulthood. During the accumulation phase, assets grow on a tax-deferred basis, allowing investment earnings to compound over time without annual taxation.

Unlike traditional IRAs, Trump Accounts do not require earned income for contributions. Assets in the account must generally be invested in broad, low-cost U.S. equity index funds or ETFs, reinforcing the long-term growth focus of the program.

Who Is Eligible to Open a Trump Account?

Eligibility is based primarily on age and identification requirements:

• The beneficiary must be under age 18.
• The child must have a valid Social Security number.
• A parent, legal guardian, or other authorized adult opens and manages the account on the child’s behalf.

There are no income limits for the child or the family, making Trump Accounts accessible across all income levels.

Certain children may also qualify for government seed funding, discussed below, based on birth year and citizenship status.

Government Seed Funding and Private Contributions

One of the most notable features of Trump Accounts is the one-time government seed contribution:

• Children born between January 1, 2025 and December 31, 2028 may receive a $1,000 initial deposit from the U.S. Treasury. 
• This contribution does not count towards annual contribution limits.
• The deposit is made once the Trump Account is properly established and eligible to receive funds. The details of this funding process are still forthcoming.

In addition to government funding, private philanthropic organizations have announced initiatives to provide supplemental seed funding to children who may not qualify for the federal contribution, expanding early access to these accounts. Details of these initiates and funding are currently still in process.

Who Can Contribute to a Trump Account?

Trump Accounts allow for contributions from multiple sources, offering flexibility for families. Those who can contribute to Trump Accounts include:

• Parents and legal guardians
• Grandparents, extended family members, and friends
• Employers, who may contribute as an employee benefit
• Certain charitable or governmental organizations, under specific rules

All individual and employer contributions are aggregated annually to determine whether contribution limits are met. 

Annual Contribution Limits

Like Individual Retirement Accounts, Trump Accounts have annual contributions limits.  The 2026 base annual contribution limit for Trump Accounts is:

• $5,000 per child per year, across all individual contributors
• Employer contributions of up to $2,500 per year, amounts of which are included within this $5,000 limit.
• Certain government or charitable contributions may be permitted and are not counted towards the $5,000 annual limit, provided they are made to a broad class of beneficiaries and meet regulatory requirements.

Contribution limits are expected to be adjusted for inflation in future years.

When Can Trump Accounts Be Funded?

Although the legislation is already in place, Trump Accounts are not immediately fundable.  Opening a Trump Account starts by either using an upcoming tool that will be available online at www.trumpaccounts.gov or by filing IRS Form 4547 with your tax return (About Form 4547, Trump Account(s) | Internal Revenue Service).

Contributions cannot begin until July 4, 2026, which marks 12 months after the law’s enactment. Prior to that date, families may be able to complete account elections or setup steps, but no money may be deposited until the official funding start date.

Government seed contributions will also be deposited after accounts are established and funding is permitted.  Once funding begins, contributions may continue each year until the child reaches age 18, during what is referred to as the account’s “growth period.”

Where Can Trump Accounts Be Opened?

Trump Accounts must be held with an IRS-approved trustee or custodian, similar to IRA rules. Eligible custodians include:

• Banks and trust companies
• IRS-approved non-bank IRA custodians
• Most major investment firms

Large custodians such as Vanguard, Fidelity, Schwab, and similar institutions are widely expected to offer Trump Accounts once implementation is finalized, though availability will depend on each firm’s rollout timeline.

What Happens to the Account at Age 18?

Once the beneficiary reaches age 18:

• The account may continue as a Trump Account.
• The account may convert to a traditional IRA and continue under similar tax-advantaged rules.
• Distributions may be permitted for certain qualified purposes, such as education.
• Withdrawals for non-qualified purposes may be subject to taxes and penalties, similar to other individual retirement accounts.

How are Trump Accounts Taxed?

There are multiple things to consider from a tax standpoint when setting up and using a Trump Account.

Like IRAs, Trump Account investments grow tax-deferred, so no tax is due on the account proceeds until funds are withdrawn. 

Contributions from individuals are made on an after-tax basis.  This means that only the earnings on a withdrawal are subject to income tax (and penalty, if applicable).

Contributions from other sources, such as employer contributions, are made on a pre-tax basis. This results in the full value of the contributions and earnings from these sources being subject to income tax (and penalty, if applicable).

Distributions made to children may have kiddie tax implications.  This means that distributions for certain children would be effectively taxed at the parent’s tax rate – not the child’s (potentially) lower tax rate. 

Final Thoughts

Trump Accounts represent a meaningful addition to the financial planning landscape for families with children. When used alongside other tools such as 529 plans, they can help establish a long-term investment mindset and create a financial foundation that lasts well into adulthood.

Clarity on specific rules and implementation details will continue to evolve leading up to the July 2026 funding start.  If you would like guidance on how Trump Accounts may fit into your family’s overall strategy, work with your financial advisor to determine if a Trump account makes sense for your family’s financial plan.