Whether you’re a new parent or a curious taxpayer, you’ve likely heard about the new Trump Accounts which were created under the One Big Beautiful Bill Act (OBBBA) passed in July 2025.

This new type of retirement savings account is available to childern before college, careers, or first paychecks enter the picture. These accounts may offer new planning opportunities for families and for business owners thinking about creative, tax-efficient employee benefits.

Trump Account Eligibility and Ownership Rules

A Trump Account can be opened for any child who:

• Is a U.S. citizen
• Has a valid Social Security Number
• Has not turned 18 by the end of the calendar year the account is opened

The child is the legal owner of the account, but a parent or guardian must open and manage it until the child turns 18. Grandparents and adult siblings can also open a Trump Account for the child as long as a parent or guardian hasn’t already done so, since only one account is permitted per child.

Unlike a traditional or Roth IRA, the child does not need earned income to receive contributions.

How to Open a Trump Account

You can open a Trump Account by filing Form 4547 with your 2025 tax return, filing the form separately later, or making the election at Trumpaccounts.gov. The online enrollment method is expected to be available by mid-2026.

How to Fund a Trump Account          

Total annual contributions are capped at $5,000 per child. This limit applies to all contributors combined and will be indexed for inflation starting after 2027.

Money can come from parents, grandparents, and other adults. Contributions are after-tax, similar to how you would fund a Roth IRA (i.e. there is no tax deduction for the contribution).

Children born between January 1, 2025, and December 31, 2028, are eligible for a one-time $1,000 federal deposit. This “federal seed” does not count toward the $5,000 annual limit.

Employers can contribute up to $2,500 per year to an employee’s child’s Trump Account. These contributions:

• Are excluded from the employee’s taxable income
• Do count toward the child’s $5,000 annual limit
• Are a tax deduction for the employer

This is a unique benefit and something business owners may want to pay close attention to.

Some private organizations and state-level programs may also contribute. For example, certain low-income ZIP codes may qualify for additional deposits from private foundations.

Trump Account Investment Requirements

Funds in the account must be invested in low-cost mutual funds or exchange-traded funds (ETFs) that track the S&P 500 or other indexes made up of primarily U.S. companies. You can’t invest in individual stocks or alternative investments like real estate, commodities, collectibles, precious metals, or digital assets. Investment fees are capped at 0.10% (10 basis points).

Tax Advantages and Withdrawal Restrictions

Money in a Trump Account grows tax-free until it’s withdrawn. With very limited rollover exceptions, you generally cannot access the funds until the child turns 18.

Once the child turns 18, the account begins to follow traditional IRA-style rules. Withdrawals before age 59.5 may trigger a 10% penalty, depending on how and why you take the money out.

How Withdrawals are Taxed

Withdrawals can come from two “buckets,” and each has different tax treatment.

• After-tax individual contributions come out tax-free, but the earnings are taxable.
• Government and employer contributions are fully taxable when withdrawn, since they went in pre-tax.

Trump Accounts vs. 529 Plans vs. IRAs

Trump Accounts aren’t meant to replace existing savings tools, but they can complement them.

Trump Accounts vs. 529 Plans

Withdrawals from 529 plans are tax-free as long as they are used for qualifed education expenses. Trump accounts can be used for any purpose, not just education, however you generally can’t access those funds until you’re 59.5 years old.

Also, 529 plans allow much higher contributions. There is no federal annual limit on contributions to a 529 plan, although some states set aggregate limits ranging from around $235,000 to $590,000 per beneficiary.

For practical purposes, most people limit annual contributions to the annual gift tax exemption ($19,000 for 2026) to avoid triggering gift tax return filing requirements.

Trump Accounts vs. Roth IRAs

Roth IRAs offer tax-free growth and tax-free withdrawals (subject to certain rules). However, the child must have earned income to qualify for IRA contributions.

Trump Accounts don’t require earned income, so they’re accessible much earlier. However, withdrawals may be subject to tax.

Do Trump Accounts Fit in Your Plan?

Trump Accounts may offer another opportunity to set your child up financially or offer benefits that appeal to your employees. And even if you aren’t interested in this type of account, you may still want to open a Trump Account to take advantage of the free federal seed money if you have a child born between January 1, 2025, and December 31, 2028.

Whether they make sense for you depends on your family and your business. That’s where a conversation with a tax professional can add real value.

If you’re curious about how Trump Accounts fit into your broader tax and financial plan, let’s talk. A little planning now can make a big difference down the road for you and the next generation.