Families have long had a familiar menu of accounts for children: 529 plans for education, custodial accounts for flexibility, and IRAs and Roth IRAs for children with earned income. Trump Accounts add a new option.
They are not a replacement for these other accounts, but they are a useful planning tool for families who want to put money aside early and start compounding their investment as soon as possible.
What is a Trump Account?
A Trump Account is a new type of child-owned Individual Retirement Account. While the account is established for the benefit of a child, a parent, guardian, grandparent, or other eligible adult will manage it while the child is young. In practical terms, think of it as a “starter IRA” for children, with special rules that apply before the child reaches adulthood.
How do Trump Accounts work?
One important comparison to ordinary IRAs is around contributions. During the account’s “growth period,” when the child is under 18, contributions can be made even if the child does not have earned income. Parents, relatives, friends, and others may contribute, subject to an annual limit. For 2026 and 2027, the annual contribution limit is $5,000, with cost-of-living adjustments after that. Employers can also contribute, with up to $2,500 per year during the growth period, with these contributions counting toward the overall $5,000 limit.
Who qualifies for the $1,000 federal contribution?
The federal seed contribution you may have heard about is limited: U.S. citizen children born between January 1, 2025, and December 31, 2028, may qualify for a one-time $1,000 federal contribution.
How are distributions taxed in Trump Accounts?
Another important comparison to IRAs is related to tax treatment and distributions. Like IRAs, Trump Accounts are generally tax-deferred, not tax-free. Individual contributions to Trump Accounts are not deductible, and later withdrawals, in excess of your contributions, will be subject to ordinary income tax. Once the child reaches adulthood, Trump Accounts are largely subject to the same distribution rules as traditional IRAs, including the possibility of an additional 10% early distribution tax unless an exception is available. For education planning, a 529 plan remains the more direct tool because qualified education withdrawals can be taken tax-free.
How is the money in a Trump Account invested?
A Trump Account’s investment approach is intentionally simple. During the growth period, Trump Account assets are limited to eligible mutual funds or ETFs that track broad indexes of primarily U.S. companies. At launch, Treasury announced that contributions would be invested in the State Street SPDR Portfolio S&P 500 ETF, ticker SPYM, with additional low-cost U.S. index ETF options expected to become available in the future.
How do I open a Trump Account?
Families can open a Trump Account for eligible children using IRS Form 4547. This form can most easily be completed and submitted in the Trump Accounts app. Once the account is open, families can manage it through the app, view balances and performance, make optional contributions, set up recurring contributions, and manage multiple children’s accounts in one place. We’ve included a link to the Trump Account website as well as a QR code to download the app below.
U.S. Department of the Treasury is the developer of Trump Accounts: Official App.
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