Trump Accounts: What Parents and Investors Need to Know

What are Trump Accounts?

Trump Accounts are essentially traditional IRAs for anyone under 18, but don’t require ‘working income’ like a normal IRA does. These accounts are one of the newest investment vehicles to come out of the One Big Beautiful Bill.

Let’s break down some of these rules below.

Trump Accounts Rules

So how do these things work? They are essentially pre-18 traditional IRA accounts. And if you have a child born between 2025 and 2028, they are eligible for a one-time $1000 contribution from the Treasury, a pilot contribution.

The election to begin the pilot contribution is done in one of two ways:

1. You file a Form 4547 on your 2025 (or later year) tax return.
2. You go to Trumpaccounts.gov and fill out the information there.

By filling out the form either on your tax return, or online, you are ‘electing’ into starting the account and will either receive your pilot contribution, and any other children who are of eligible age.

Where Does the Account Actually Live?

When you open a Trump account, it starts with the government. But it doesn’t have to always live there.

The first account for any child is an “initial Trump account,” which is created and organized by the Secretary of the Treasury. You open it by filing Form 4547 on your tax return or through the official Treasury electronic portal.

Once the initial account is set up, you’re allowed to roll the money into a “rollover Trump account” at a private financial institution during the child’s growth period. And if your firm was already an IRS-approved nonbank trustee as of December 31, 2025, they’re automatically authorized to act as a trustee for Trump accounts. No extra approval needed.

One rule to keep in mind: a child can only have one funded Trump account at any given time. So it’s either at Treasury or at a private institution — not both.

How the $1,000 Pilot Contribution Actually Works

The $1,000 seed money for kids born between 2025 and 2028 sounds simple, but the IRS mechanics behind it are worth understanding.

When the election is processed, the IRS creates a “special taxable year” for the child that closes immediately. That special year has zero federal income tax liability. The child is then treated as having made a $1,000 payment against that zero-sum liability, which creates a $1,000 overpayment.

That overpayment gets “refunded” by the Secretary directly into the child’s Trump account. That’s your pilot contribution.

And one more important detail: this $1,000 is protected. It cannot be reduced or offset to pay for back taxes, child support, or any other federal or state debts. It’s locked in for the kid.

Who Controls the Account?

Because we’re talking about minors here, somebody has to be in charge.

The Secretary designates a “responsible party” to take actions on behalf of the child. In most cases, it’s whoever made the election to open the account. But if a pilot program election isn’t being made at the same time, the right to open the account follows a strict priority: legal guardian first, then parent, then adult sibling, then grandparent.

The responsible party has real authority here. They can select between investment options, direct rollovers to other trustees, or even move funds into an ABLE account if the child has a qualifying disability.

Contributions

The max contribution each year is $5,000. $2,500 can come from employers, but that amount still goes to the max. And the contributions from the employers are not considered to be taxable income either. There is no deduction for this amount, similar to a 529 plan contribution.

So, what are the mechanics? With $1000 of seed money from the government, you can essentially invest in stocks, mutual funds, and index funds, and allow them to grow for your kids. And similar to an IRA, no distributions until they turn 18.

Once the child turns 18, they have the right to use the money, but the intent is to have it remain in the account until they turn 59 1/2.

Essentially, think of it as a weird pre-18 IRA.

Investment Constraints: Safe and Steady

During the “growth period” (basically from birth until the child turns 18), these accounts are built for stable, long-term wealth building.

All funds have to be invested in a broad index of equities, primarily U.S. companies. Think total market index funds, not individual stock picks. Fees and expenses are capped at 0.1% annually, which means the account isn’t getting eaten alive by admin costs over 18 years.

No leverage is allowed. And just like other IRAs, all contributions (other than rollovers) have to be made in cash.

The guardrails are tight here, and that’s by design. These are meant to compound quietly for almost two decades.

Roth IRA Strategy

I know many of you with kids are looking for ways to create ‘earned income’ so you can contribute cash into a Roth IRA for them.

This is not always easy and can be risky depending on how you go about it (work with us to see the legit way to do it).

But, it appears (as of now, still pending guidance from Treasury) that you can convert the Trump account into a Roth IRA once they turn 18.

There is no earned income requirement to contribute to a Trump account. So, this could be significantly advantageous in comparison to the ‘paying your kids’ strategy.

Why?

1. You can contribute to it from birth, while the ‘paying your kids’ strategy isn’t legit until about 8 or 9 years old (per court cases). This also means more years of contributions.
2. This locks in a 17-year nest egg for your kids.

We’ll be updating the guidance on this as it develops and as we think of more creative strategies!

This type of investment account should be considered alongside 529 plans and other custodial accounts. They are all unique and have their own ultimate advantages.

What to Do Right Now for 2026

With the regulations now in place and the accounts applicable to taxable years beginning January 1, 2026, the next step for parents is preparation. If you have a child born between 2025 and 2028, make sure you have their Social Security number ready. It’s a strict requirement for the $1,000 pilot contribution election.

We’re actively tracking new guidance on Trump Accounts and building strategies around them. If you want help deciding whether (and how) to use these for your kids, we’re here to help.

Start working 1:1 with a tax strategist today.

Other Resources

• 2025 Tax Bill: Trump’s One Big, Beautiful, Bill
• Trump Accounts & Gift Tax: What the IRS Says