WHAT YOU NEED TO KNOW ABOUT

Trump Accounts: New Federal Investment Accounts for Children

The government will deposit $1,000 for every qualifying newborn — and families can contribute up to $5,000 more per year.

March 2026

In the summer of 2025, Congress passed the One Big Beautiful Bill Act (OBBBA), which included a provision creating a new type of tax-advantaged investment account for American children. These accounts, officially called “Trump Accounts,” are set to launch on July 5, 2026. Whether you’re a new parent, a grandparent, or simply planning ahead, here’s what you should know.

What Is a Trump Account?

A Trump Account is a federally established, tax-advantaged investment account designed to give children a financial head start. Think of it as a hybrid between a traditional IRA and a 529 college savings plan. The money in the account grows tax-deferred in low-cost index funds until the child turns 18, at which point the account converts to a traditional IRA.

The headline feature: the U.S. Treasury will deposit a one-time, $1,000 federal grant into the account of every eligible child. This grant does not count toward the account’s annual contribution limit.

Who Is Eligible?

Eligibility breaks down into two tiers:

Opening an account: Any U.S. citizen under age 18 with a Social Security number can have a Trump Account opened on their behalf by a parent, legal guardian, or other authorized person.

Receiving the $1,000 federal grant: Only children born between January 1, 2025, and December 31, 2028, who are U.S. citizens with a valid Social Security number, qualify for the government’s $1,000 seed deposit.

In other words, older children can still have accounts opened and funded by family, but only the 2025–2028 birth cohort receives the free $1,000 from the Treasury.

How Contributions Work

Trump Accounts have several contribution channels, each with its own rules:

Source	Annual Limit	Key Details
Federal Grant	$1,000 (one-time)	Only for children born 2025–2028; does not count toward annual limit
Family / Individual	$5,000	After-tax dollars from parents, grandparents, or others; indexed to inflation
Employer	Up to $2,500	Tax-free to the employee; counts toward the $5,000 annual limit; can be made via Section 125 cafeteria plan
Government / Charity	No cap	State, local, and federal governments and charities may contribute; these do not count toward the $5,000 limit

 

Important note on gift tax: As of early 2026, contributions to Trump Accounts are not eligible for the annual gift tax exclusion, which means contributors may need to file a gift tax return. This is widely expected to change, but families should be aware of the current rule.

Investment Rules

Funds in a Trump Account must be invested in eligible mutual funds or exchange-traded funds (ETFs) that track a broad U.S. stock index, such as the S&P 500. These funds cannot use leverage and must have annual fees below 0.1% of the fund balance. This keeps costs low and aligns with a long-term, passive investment strategy.

Withdrawals and What Happens at Age 18

No withdrawals are permitted under any circumstances while the child is under 18. Beginning January 1 of the year the child turns 18, the account converts to a traditional IRA. At that point, the now-adult account holder gains control and can use the funds for expenses like education, a first home purchase, or starting a business. Distributions will be taxed as ordinary income.

After conversion, only the beneficiary can make further contributions, and they must have earned income to do so (consistent with standard IRA rules). Parents and guardians can no longer contribute once the child reaches 18.

How the Numbers Could Add Up

According to the White House Council of Economic Advisers, the long-term growth potential is significant. For a child born in 2026, assuming medium historical stock returns:

• With no additional contributions beyond the $1,000 seed: approximately $5,800 by age 18.
• With maximum annual contributions ($5,000/year): approximately $303,800 by age 18 and potentially over $1 million by age 28.

Even modest annual contributions can produce meaningful results over an 18-year investment horizon thanks to the power of compound growth.

Private Sector Participation

A number of major employers have pledged additional contributions for their employees’ children. Companies including JPMorgan Chase, Intel, and Steak ’n Shake have committed to matching the government’s $1,000 contribution for employees’ children born during the 2025–2028 window. Additionally, several prominent philanthropists have pledged billions in supplemental contributions for children in lower-income ZIP codes. If your employer has announced a matching program, this could effectively double or triple the starting balance in your child’s account.

How to Enroll

Enrollment is straightforward:

• File IRS Form 4547 (Trump Account Election) with your tax return, or register online at gov.
• The IRS will send account activation information beginning in May 2026.
• Accounts officially go live and can accept contributions starting July 5, 2026.

If multiple people could open an account for the same child, the IRS follows a priority order: legal guardian first, then parent, then adult sibling, then grandparent. Once someone makes the election, no duplicate account can be opened for that child.

How Trump Accounts Compare to 529 Plans

Trump Accounts complement 529 plans but don’t replace them. The key difference is flexibility: Trump Accounts can eventually be used for education, housing, or general purposes (once converted to an IRA), while 529 plans offer tax-free withdrawals specifically for qualified education expenses. Families may benefit from using both, depending on their financial goals.

The Bottom Line

Trump Accounts represent a new tool in the family financial planning toolkit. If you have a child born between 2025 and 2028, you’re leaving $1,000 of free federal money on the table by not enrolling. Even for children outside that birth window, the tax-deferred growth and low-cost investment structure make these accounts worth considering.

As always, we recommend discussing any new financial planning strategies with your tax advisor or financial planner to understand how Trump Accounts fit within your family’s overall plan.

Disclaimer: This article is provided for general informational purposes only and does not constitute legal, tax, or financial advice. The information herein is based on publicly available guidance from the IRS and other federal sources as of March 2026. Rules and regulations are subject to change. Please consult a qualified tax professional or financial advisor regarding your specific circumstances.