Trump Accounts Are Coming July 4th — Here’s What You Need to Know
A new tax-advantaged savings vehicle for children is launching this Independence Day. Here's a practical breakdown of what Trump Accounts are, how to enroll, and importantly, where they fit in your overall savings strategy.
What Is a Trump Account?
Trump Accounts are a new, custodial-style traditional IRA for minors, owned by the child but administered by an adult, established by the One Big Beautiful Bill Act (OBBBA) of 2025.
A Trump Account is an investment account that acts similarly to a traditional IRA. Investment income in the account is tax-deferred until withdrawn, and ordinary income taxes are paid upon withdrawal. Investments are limited to low-cost index mutual funds or ETFs. If funds are withdrawn after age 18 and before reaching a retirement age of 59 ½, an additional 10% penalty may apply unless a qualifying exception is met.
Who Qualifies?
To open a Trump Account, your child must have a Social Security number and be under 18 years old on December 31 of the year the account is opened. Each child may have only one Trump Account.
How to Enroll — Do This Now
This step enrolls your child. It does not open the account yet. Contributions cannot begin until July 4, 2026.
To get started, sign in to your IRS account and complete and submit Form 4547 to elect your child. You can also visit TrumpAccounts.gov to make your election online, and it will direct you to the right place. Have your child's Social Security number handy before you begin. The process is straightforward and takes just a few minutes.
The $1,000 Government Seed Money
The program features a pilot contribution of $1,000 for children born between January 1, 2025, and December 31, 2028, who are U.S. citizens with a valid Social Security number. Filing Form 4547 is what opts your child into this benefit.
Where Will the Accounts Be Held?
In April 2026, the U.S. Treasury announced it designated BNY Mellon and Robinhood as the initial financial institutions where accounts can be held. Rollovers to other financial institutions will be available after their launch.
Corporate & Philanthropic Contributions to Watch
Michael and Susan Dell announced they would donate $6.25 billion to fund Trump Accounts for up to 25 million children, providing $250 each for children below eleven years old who live in ZIP codes where the median family income is $150,000 or less. To see if your child may qualify, you can look up the census info in your area at https://data.census.gov. Since they are for children who are older than those covered by the federal $1,000 grants, the Dell contributions will be for children who do not receive the federal grants. More information on this additional grant can be found here: https://www.onedell.com/investamerica/
This is a meaningful free boost, and there may be other companies and philanthropists who follow suit, so it's worth staying alert to new announcements.
Contribution Rules
No contributions are necessary, but you can deposit up to $5,000 per year to maximize growth. Anyone can contribute to a child's Trump Account, although individual contributions during the growth period are not tax-deductible.
Employers can contribute up to $2,500 (adjusted for inflation after 2027) tax-free to the Trump Accounts of employees or their dependents. If your employer ever adds this as a benefit, it would be worth taking advantage of.
Important: Since contributions are after-tax dollars, you'll want to track those contributions carefully each year, ideally with your accountant, so your children aren't taxed on the same money twice when they eventually withdraw.
The Big Opportunity: Converting at Age 18
Before January 1 of the calendar year in which the child will reach 18 years old, the funds in the account cannot be withdrawn, and after that, the account will be treated the same as a traditional IRA.
Here's where the real planning opportunity lies: once your child turns 18, they can convert the entire account to a Roth IRA. The sweet spot will likely be when they have little to no income, and you are no longer claiming them as a dependent, or when they are potentially at a very low tax rate. If the account has been maximized each year and the market performs well, this could be worth $100,000–$200,000 at that time. Timing the conversion to their lowest income years is key.
This is also why careful recordkeeping is essential. You'll need to track the pre-tax vs. after-tax basis in the account for the next 20+ years, a real administrative consideration that shouldn't be overlooked.
The Biggest Opportunity: Early Retirement Success Begins at a Young Age
Let’s say a child born in 2026 receives $5,000 contributions for 17 years, and then stops contributing. At an 8% growth rate, it would be worth $168,751 at the end of that 17-year period. The account becomes an IRA on their 18th birthday, and the young adult now converts the entire account to a Roth IRA (assume any taxes owed were paid from outside funds for the sake of this example).
If it continues to grow at 8% thereafter for their retirement in a Roth IRA, it may be worth approximately:
$1,000,000 at age 40
$2,000,000 at age 50
$3,000,000 at age 55
All in a tax-free account!!
This assumes no further contributions were made. Imagine if they also made annual Roth IRA contributions ($7,500 limit in 2026) during the early stages of their career.
This is how thoughtful planning and investing early and consistently provide for work-optional lifestyles, early retirement, and flexibility. It provides financial freedom!
How Does It Compare to Other Accounts?
Here's how the most common options stack up:
529 Plan Purpose-built for education savings. Contributions grow tax-deferred, and withdrawals are completely tax-free for qualified education expenses. Many states also offer a state income tax deduction on contributions. No earned income required, no cost basis tracking headache. This is the strongest first choice for most families. If funds are not needed for education, up to $35,000 could be transferred to a Roth IRA and continue to grow tax-free for retirement.
Custodial Roth IRA If your child has any earned income, from a part-time job, lawn mowing, babysitting, etc., a Custodial Roth IRA is an exceptionally powerful tool. Contributions go in after-tax, and the account grows completely tax-free with no conversion required later. Contribution limits are higher than a Trump Account, and there's no complex cost basis tracking.
Custodial UTMA/UGMA Investment Account These custodial accounts are owned by the child and allow broad use as long as the money benefits the child, with no annual contribution limits (though gift tax rules still apply). They offer the most flexibility of any option. Funds can be used for virtually anything, from college extras to a first car or apartment. The tradeoff is taxes: UGMA/UTMA accounts are taxed in three tiers on unearned income, with the first $1,350 (2025/2026) exempt, the next $1,350 taxed at the child's rate, and amounts over $2,700 taxed at the parents' marginal rate, rules known as the "kiddie tax." That’s potentially $2,700 of capital gains that can be realized at more favorable tax rates. Children take full ownership at the age of majority. There are also no restrictions on investment choices. You can hold individual stocks, bonds, ETFs, and more. UTMA/UGMA accounts are a solid option when you've already funded tax-advantaged accounts and want additional flexibility, or when you're saving for goals that fall outside of education and retirement, so long as that goal is for the child’s benefit.
Trump Account Best used to capture free money — the government's $1,000 seed contribution, the Dell philanthropic gift, or future employer/charitable contributions. Personal contributions should come after your own retirement plan is on track, your 529 plan is on track, or Custodial Roth IRA is funded, if possible. The tax-deferred growth is a benefit, but 20+ years of cost basis tracking are real drawbacks compared to the other options above that help avoid double-taxing your already after-tax contributions.
Bottom Line
Trump Accounts are a new and interesting tool, especially for families who qualify for the free seed money from the government, Dell, or future donors. Enroll at TrumpAccounts.gov. But when it comes to your own dollars, don’t overlook 529s, Custodial Roth IRAs, and even UTMA/UGMA accounts, which offer tax advantage opportunities and may provide greater flexibility for many families.
As always, reach out if you have questions. We're here to help you navigate these decisions as part of your broader financial plan.
This article is for informational purposes only and does not constitute tax, legal, or investment advice. Please consult your financial advisor and accountant before making contribution decisions.
