TRUMP Accounts: How They Work and Who They Impact

February 26th, 2026 by Blake Pinyan

As part of the One Big Beautiful Bill Act passed on July 4, 2025, Congress introduced a new savings vehicle commonly referred to as TRUMP Accounts.

In this article, I’ll walk through:

• Who they’re designed for
• Rules before and after age 18
• Tax implications
• Advantages and disadvantages
• How to open one
• Key planning considerations

Who TRUMP Accounts Were Created For

TRUMP Accounts are retirement savings accounts for children, designed to give them a long-term head start.

They share characteristics of an IRA and can be opened for any individual from birth through the year they turn 18. An election must be made to establish the account, and the beneficiary must have a Social Security number.

The first TRUMP Account must be opened through the U.S. Treasury Department. At a future date, accounts may be rolled over to a private financial institution.

The adult who opens the account serves as custodian until the child reaches the end of the custodial period (typically age 18), similar in structure to a UTMA account.

Pilot Program Incentive

U.S. citizen children born between 2025–2028 are eligible for a one-time $1,000 contribution from the U.S. Treasury – provided an account is properly opened and elected. This government contribution does not count toward annual contribution limits.

Rules Prior to Age 18 (The “Growth Period”)

The Growth Period runs from account creation through December 31 of the year before the child turns 18.

Contributions

• Up to $5,000 per year (indexed for inflation)
• Contributions are after-tax and non-deductible
• Contributions may not begin until July 4, 2026
• No earned income requirement
• No AGI limitations
• Contributions are treated as gifts and subject to annual gift tax rules

Importantly, these contributions do not count toward Traditional or Roth IRA limits.

Special Contribution Rules

• Government/Charitable contributions:
  • Unlimited and do not count toward the $5,000 annual limit. Excluded from beneficiary income.
• Employer contributions:
  • Up to $2,500 annually (indexed for inflation).
  • Count toward the $5,000 annual limit.
  • Deductible to the employer and excluded from beneficiary income.

Investment Restrictions

During the Growth Period, investments are limited to eligible index-based funds – primarily U.S. stock indices such as the S&P 500.

• Expense ratios must be below 0.10%
• No leverage permitted
• Trustee provides list of eligible investments

Withdrawals & Death

• No withdrawals allowed before age 18
• Rollovers permitted only to another TRUMP Account
• If the beneficiary dies before 18, the account becomes taxable to the inheritor (or estate if no beneficiary designated)

Earnings grow tax-deferred and are not subject to Kiddie Tax rules.

Rules at Age 18 and Beyond

Beginning January 1 of the year the child turns 18, the account converts to a Traditional IRA.

From that point forward:

• Earned income is required for new contributions
• Standard IRA investment rules apply
• Funds may be rolled into a Traditional IRA, Roth IRA, or employer-sponsored plan
• Early withdrawal penalties apply before age 59½
• Required Minimum Distributions begin at age 75

Notably, TRUMP Accounts are not subject to IRA aggregation rules, meaning they do not interfere with Backdoor Roth planning strategies under the Pro-Rata rule.

Tax Implications

Because contributions are made after-tax, they create basis in the account.

Upon withdrawal:

• Contributions (basis) come out tax-free
• Earnings are taxed as ordinary income
• Distributions are prorated between basis and earnings

Careful recordkeeping of contributions will be critical to avoid overpaying taxes in the future. This administrative burden may become a practical challenge for many families.

Advantages and Disadvantages

Advantages

• $1,000 government contribution for eligible children (2025–2028 births)
• No earned income requirement prior to age 18
• No AGI limitations
• Employer contribution opportunity
• Separate from IRA annual contribution limits
• Not subject to IRA aggregation rules
• Potential Roth conversion opportunity at age 18

Disadvantages

• Contributions are not deductible
• Earnings are taxable upon withdrawal
• Limited annual contribution cap
• Early withdrawal penalties apply after 18 (until 59½)
• Death before 18 creates immediate tax consequence

How to Open a TRUMP Account

There are two primary methods:

1. File Form 4547 with your 2025 tax return (or as a standalone filing) to make the election.
2. Use the official online portal at TrumpAccounts.gov (expected mid-2026 launch).

Both owner contributions and the $1,000 pilot program funding cannot occur until after July 4, 2026.

Planning Considerations

These accounts are particularly attractive for high-income families because:

• There are no AGI limits
• No earned income requirement prior to age 18
• Contributions grow tax-deferred
• Kiddie Tax rules do not apply

For affluent families, fully funding the account annually from birth could create substantial long-term retirement capital.

Business owners may also benefit by contributing up to $2,500 annually for children employed in the business – creating a tax deduction for the company while funding long-term savings.

Perhaps the most compelling opportunity is evaluating a Roth conversion at age 18, when the beneficiary is likely in a low tax bracket. Converting early could allow decades of tax-free growth.

Final Thoughts

TRUMP Accounts represent a new and unique retirement savings vehicle for children. At minimum, the $1,000 government contribution makes them worth evaluating for eligible families.

Like any planning strategy, their value depends on your broader financial goals, tax profile, and long-term strategy.

We work with our clients to determine whether establishing a TRUMP Account aligns with their overall financial plan and how to integrate it thoughtfully alongside other planning tools.