Trump Accounts: A Fresh Way to Invest in Your Child’s Future

If you’re a parent or business owner thinking ahead about your family’s financial future, there’s a new savings option worth paying attention to — the Trump Account, created under the One Big Beautiful Bill Act signed on July 4, 2025.

Whatever your view of the name, the concept is simple: help families save for their children’s future in a tax-friendly way. With some planning now, you can be ready when contributions start in 2026.

What Is a Trump Account?

Think of it as a retirement-style savings account for kids. It’s opened in your child’s name and converts to a traditional IRA once they turn 18.

Eligibility:

• The child must be under 18 at year-end.

• The child must have a valid Social Security number.

The first accounts will open July 4, 2026, through the Treasury Department. Families can plan now so they’re ready when contributions begin.

Key takeaway: The Trump Account is a long-term savings vehicle that starts in childhood and continues for life.

How Contributions Work

Parents, grandparents, or others can contribute up to $5,000 per year per child. The limit increases for inflation starting in 2027.

Unlike IRAs, contributions must be made by December 31 each year (not tax day). Contributions are non-deductible until the child turns 18.

Exceptions to know:

• Employer contributions: Up to $2,500 per year for an employee’s child or dependent. These don’t count as taxable income.

• Family flexibility: Parents and relatives can still contribute up to the $5,000 annual limit even if an employer adds funds.

Pro tip: Set a year-end reminder — Trump Account contributions close on December 31, not April 15.

Special “Bonus” Contributions

The new law includes a few extra ways to fund these accounts:

• $1,000 Newborn Credit: For children born 2025–2028, parents can claim a $1,000 credit that automatically funds the Trump Account.

• Community Programs: States and qualified nonprofits may add contributions for groups of kids in their area.

• Rollovers: Families can move funds tax-free between Trump Accounts.

Insight: These built-in credits and community options could help many families start saving faster.

Investment Rules and Growth

Funds inside the account grow tax-free. Until the child turns 18, investments must:

• Track a major U.S. index (like the S&P 500)

• Avoid leverage (no borrowing)

• Keep expenses under 0.1%

In plain terms, these will likely be low-cost index funds — simple, broad, and steady for long-term growth.

Withdrawing Money

Withdrawals usually aren’t allowed until the child turns 18 (except to fix an excess contribution).

After that, the account behaves like a traditional IRA:

• Withdrawals in retirement are taxable, unless used for education or a first home.

• Earnings grow tax-deferred along the way.

Because contributions may come from different sources, keep good records of where the money came from.

Why Recordkeeping Matters

Here’s a quick example:

Susie’s parents claim the $1,000 newborn credit and add $5,000 a year until she’s 18. She’ll have about $85,000 in after-tax contributions. By retirement, that could grow to $2.9 million. If she withdraws $100,000, about $2,930 would be tax-free — but only if her records prove it.

Keeping clear records — and staying in touch with your Tax Advisor — helps protect the account’s tax treatment decades down the road.

What We’re Still Waiting On

The IRS still needs to clarify a few details:

• How parents will claim the $1,000 newborn credit

• Which investment funds will qualify

• How Trump Accounts interact with other IRAs once a child starts earning income

Your Tax Advisor will keep you updated as these rules take shape before the July 2026 rollout.

The Bottom Line

The Trump Account is a fresh, simple way to invest in your child’s financial future. It combines the long-term growth of an IRA with early-life contributions that compound over decades.

For business owners and families thinking about legacy, education, and tax-efficient savings, this could become a cornerstone of your wealth strategy.

As with any new program, planning and documentation are key. Start preparing now, and you’ll be ready to act when accounts open in 2026.

Don’t hesitate to reach out if you’d like to explore how a Trump Account fits into your family’s long-term plan and what steps to take before launch.