Many families have long had trouble saving money for their children. The cost of college continues to rise, jobs are evolving and parents want their children to begin adult life with a financial stability. To assist with this, the U.S. government has implemented a new program called: Trump Accounts.
These accounts are supposed to encourage kids get a jump on investing, with a bit of support from the federal government and long-term tax advantages. When used correctly, a Trump Account can blossom into a powerful financial foundation of a child’s future.
This guide explains it all in clear, so any parent can understand what Trump Accounts are, who would qualify for them and whether they make sense for their family.
What Is a Trump Account ?
A Trump Account is a tax-advantaged investment account for children under 18. It was created under the One Big Beautiful Bill Act, also known as the Working Families Tax Cuts Act.
Think of it as a starter retirement-style account for kids, even though it can be used much earlier in life for important goals like education, buying a home, or starting a business.
The account belongs to the child, but parents or legal guardians manage it until the child turns 18. After that, the child takes full control, and the account begins to follow normal IRA-style rules.
What makes this account special is that some children receive free money from the government to get started.
Who Is Eligible for a Trump Account ?
Any child in the United States who is under 18 and has a valid Social Security number can have a Trump Account opened for them.
However, the $1,000 government seed contribution is limited to a specific group:
- The child must be a U.S. citizen
- The child must be born between January 1, 2025, and December 31, 2028
- Only one account per child is allowed
If your child qualifies, that $1,000 is deposited once and begins growing through investments. It does not need to be repaid.
How Trump Accounts Work in Simple Terms
Trump Accounts invest money in low-cost U.S. stock market index funds, similar to the S&P 500. These funds track large American companies and are designed for long-term growth.
The government limits fees strictly. Investment costs cannot exceed 0.10% per year, which helps protect growth over time.
Money inside the account grows tax-deferred, meaning you don’t pay taxes every year on gains. Taxes apply only when money is withdrawn later, under specific rules.
Key Trump Account Rules at a Glance
| Feature | Details |
| Who can open | Parent or legal guardian |
| Who owns it | The child |
| Government seed | $1,000 (eligible births only) |
| Annual contribution limit | $5,000 per child |
| Employer contribution | Up to $2,500 (counts toward limit) |
| Investment type | Low-cost U.S. index funds |
| Withdrawals before 18 | Not allowed |
| Control at age 18 | Transfers fully to child |
How to Open a Trump Account
Trump Accounts officially begin in 2026.
Parents or guardians can open the account by submitting IRS Form 4547 with their tax return or separately. An online option will also be available through trumpaccounts.gov starting mid-2026.
The government will begin sending activation details in May 2026, and accounts become fully active around July 4–5, 2026.
At first, accounts are held by the U.S. Treasury. Later, families can move the account to private providers like Fidelity or Vanguard through a direct rollover, without losing tax benefits.
There are no income requirements to open or fund the account.
How Much Can You Contribute ?
Families can contribute up to $5,000 per child per year. This limit applies to all individual contributions combined.
Employer contributions are allowed as well. If your employer offers this benefit, they can contribute up to $2,500 per year through workplace plans. These contributions are usually pre-tax.
The government’s $1,000 seed money and approved charitable or government contributions do not count toward the $5,000 limit.
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Investment Rules You Should Know
Trump Accounts are designed for steady, long-term growth, not risky trading.
Money must be invested in U.S.-based stock index funds or ETFs. Leveraged or high-risk investments are not allowed.
This structure keeps things simple, affordable, and focused on long-term wealth building rather than speculation.
Can You Withdraw Money Before Age 18 ?
In almost all cases, no.
Trump Accounts are locked until the child turns 18. This rule exists to protect the child’s future and prevent early spending.
Once the child turns 18, the account changes.
What Happens When the Child Turns 18 ?
At 18, the account follows rules similar to a traditional IRA, but with extra flexibility.
The young adult can use up to 25% of the account balance without penalty for specific goals:
- Buying a first home
- Starting a business
- Paying for education, including trade schools
Other withdrawals before age 59½ usually face taxes and a 10% penalty.
If the account is kept separate from other IRAs, it can also offer smart tax planning options later in life.
How Taxes Work
Money grows tax-deferred while inside the account.
Individual contributions are made with after-tax money, so only the earnings are taxed when withdrawn.
Employer or government contributions are pre-tax, meaning both the contribution and earnings are taxed at withdrawal.
In some cases, the kiddie tax may apply if money is withdrawn while the child has little earned income.
State tax treatment may vary.
How Trump Accounts Compare to Other Options
Trump Accounts are not meant to replace all savings tools. They work best alongside other plans.
- 529 plans are better for education-only goals with tax-free withdrawals.
- UGMA/UTMA accounts allow flexibility but have fewer tax advantages.
- Custodial Roth IRAs require earned income, while Trump Accounts do not.
Many families may benefit from using more than one option depending on goals.
The Dell Family Contribution
In late 2025, the Dell family announced a $6.25 billion donation to support Trump Accounts. Eligible children receive an additional $250, on top of the $1,000 government seed.
This shows how Trump Accounts can also attract support from charities, companies, and local governments.
Who Benefits the Most?
Trump Accounts are especially helpful for:
- Families with children born between 2025 and 2028
- Parents whose employers offer matching contributions
- Families who want long-term, protected savings for children
Even small contributions can grow significantly over time thanks to compound growth.
Final Thoughts
Trump Accounts give children a real financial head start, especially for families who qualify for the government seed money. They are not perfect, and they won’t fit every situation, but they add a powerful new option for building long-term wealth.
For eligible families, opening the account early—even with no extra contributions—can still make a meaningful difference over time.
The key is understanding how it fits into your overall financial plan and using it wisely.
