What are Trump Accounts?
In 2025, President Trump signed a bill known as the “One Big Beautiful Bill Act” or OBBBA. While the bill includes many changes, one of the new items that was introduced were special savings accounts for children known as the Trump Savings Account. This new type of account takes inspiration from already existing IRA accounts, but adds a slight twist to it.
As of the time of writing this post, there are still some details which have not been fully finalized, and it seems like the accounts will officially “launch” on July 4th, 2026.
How do I open a Trump Account for my child?
Because this is the the first year the program is being implemented, the only way to establish an account for your child is to file IRS form 4547 when you are doing your 2025 taxes or to submit your request on the official Trump account website.
Key Highlights/Features
These accounts borrow some features from traditional IRAs but come with unique provisions until the child turns 18. In the year that the child turns 18, the account will then transition into a traditional IRA in their name, but until then, the child is the owner & beneficiary of the account, while the parents (or guardians) act as the account custodians.
- In order for a child to be eligible for an account, they must be below the age of 18. In addition to this, the child must be a U.S citizen or resident and have a Social Security Number (SSN), with at least one parent who also has a valid SSN
- Automatic $1,000 deposit by the federal government for children born between Jan. 1, 2025, and Dec. 31, 2028. This deposit will most probably be claimed through your taxes
- Contributions up to $5,000 per year from parents, relatives, or friends. This annual limit is a combined figure, meaning parents and grandparents cannot contribute $5,000 each as that will go above the limit. These contributions are also not tax deductible, but are instead considered “basis” in the account and will not be subject to taxes when withdrawn
- Employers can contribute up to $2,500 annually. These contributions won’t count as taxable income for your taxes, but it does count towards the $5,000 annual limit mentioned previously
- Tax-deferred growth: money compounds without annual taxation. You only pay taxes when you withdraw from the account
- Investments are limited to low-cost mutual funds & exchange-traded funds
- There are no withdrawals allowed until the child turns 18.
How do Trump Accounts Compare to Existing Options?
These new accounts are not meant to replace the existing options available for parents, but seem more like a blend of all the existing account types
- 529 Plans: Accounts specifically dedicated to putting money aside for education purposes, and offer additional tax benefits if funds are used for their intended purpose
- Custodial UTMA/UGMA: Work more like a traditional brokerage account, so they don’t provide the tax benefits, but can offer a little more flexibility with how & when the funds are used
- Roth IRA: A powerful type of account for retirement, but are not suitable for newborn children, mainly because the child must have earned income to be eligible
Summary
TRUMP Accounts offer families a new way to save for their children. While the exact details are still uncertain, young professionals starting families may want to watch closely as legislation develops and consider these accounts as a complement to other types of investments for their kids, such as a 529 account.
For newer parents, especially those who are welcoming kids between 2025 and 2028, this account is essentially a free $1,000 head start for your child and should without a doubt be taken advantage of. The bigger question is if you should be contributing additional funds, and that is a conversation worth having with a financial professional.
More information on these accounts can be found on the official government website linked.
How does this fit into my plan?
If you would like to explore how the TRUMP accounts might fit into your family’s broader plan, let’s schedule a time to talk!
Disclosure
This content is provided for informational and educational purposes only and should not be construed as personalized investment, tax, or legal advice. No advisory relationship is created by reading this article. Investment advisory & financial planning services are offered only pursuant to a written agreement through Noor Financial Services, a Registered Investment Adviser. Please consult with a qualified professional regarding your specific financial situation.
