Time can be one of an investor’s greatest advantages. Trump Accounts are a new tax-advantaged investment option designed to give children something especially valuable: an early start.

These accounts allow families to invest for a child’s long-term future, and certain young children may also qualify for a one-time $1,000 contribution from the federal government.

What is a Trump Account?

A Trump Account is a special type of individual retirement account established for a child. The child is the account owner, while a parent, guardian or other authorized adult manages the account during the child’s minor years.

Investment earnings grow tax-deferred, meaning dividends and capital gains are not taxed each year while they remain in the account.

During the child’s early years, the money must generally be invested in approved, low-cost funds that track broad indexes of primarily U.S. companies. The objective is long-term, diversified investing rather than short-term trading.

Who is eligible?

An account may generally be established for a child who:

• Is under age 18 at the end of the year the account is elected;
• Has a valid Social Security number; and
• Does not already have a Trump Account election on file.

U.S. citizen children born between January 1, 2025, and December 31, 2028, may also qualify for a one-time $1,000 federal contribution. An authorized individual must elect to open the account and request the contribution—it is not deposited automatically without action.

How much can be contributed?

Parents, grandparents, relatives, friends and employers may contribute to a Trump Account.

Total annual contributions are generally limited to $5,000 per child, with future inflation adjustments expected. Employers may contribute up to $2,500 annually for an employee or an employee’s dependent. That amount is included within the overall annual contribution limit.

Personal contributions are generally not tax-deductible, but the account’s earnings can compound on a tax-deferred basis.

When can the money be used?

Money generally cannot be withdrawn before January 1 of the year the child turns 18.

After the restricted growth period ends, the account generally follows traditional IRA rules. Withdrawals may be taxable and could be subject to an additional 10% early-withdrawal penalty unless an exception applies.

Traditional IRA exceptions may be available for certain expenses, including qualified higher education costs and up to $10,000 toward a first-time home purchase. These exceptions may eliminate the penalty, but they do not necessarily make the withdrawal income-tax-free.

For this reason, a Trump Account is best viewed as a long-term wealth-building account rather than a general-purpose savings account.

Is this a replacement for a 529 plan?

Not necessarily. The two accounts serve different purposes.

A 529 plan is specifically designed for education, with tax-free withdrawals available for qualified expenses. A Trump Account is structured more like a long-term investment and retirement account, and future withdrawals may be taxable.

Many families may benefit from using both:

• A 529 plan for education;
• A Trump Account for long-term investing and retirement;
• A traditional savings or custodial account for shorter-term needs.

The right combination will depend on the family’s goals, financial resources and desired level of control.

How do you establish a Trump Account?

A parent, guardian or other authorized individual can begin the process by:

1. Visiting IRS.gov/TrumpAccounts or signing in to an IRS Individual Account;
2. Completing IRS Form 4547, Trump Account Election(s);
3. Requesting the $1,000 federal contribution if the child qualifies;
4. Following the Treasury Department’s instructions to activate the account;
5. Selecting an available investment option; and
6. Establishing one-time or recurring contributions, if desired.

Form 4547 may also be submitted with a federal income-tax return or filed on paper.

The value of an early start

The most compelling feature of a Trump Account may not be the initial deposit or annual contribution limit—it is time.

Money invested for a child can potentially compound for decades. Even relatively modest contributions made early in life may grow into a meaningful financial resource by adulthood or retirement.

For an eligible child, claiming the $1,000 federal contribution is a sensible place to begin. From there, families should consider how a Trump Account fits alongside education savings, retirement planning and their other financial priorities.

Rules and implementation guidance may continue to evolve. Before making contributions or withdrawals, families should review the latest information from the IRS and consult with their tax and financial professionals.

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