Trump Accounts: What Parents and Grandparents Need to Know Beyond the Seed Money
Trump Accounts are a new savings opportunity for families with children under age 18. Regardless of differing political views, the purpose of this article is to explain what these accounts are, who may be eligible, how the rules work before and after age 18, and what steps families can take now.
This will be especially relevant for families with young children, those expecting a child soon, and grandparents who may want to encourage their children to enroll eligible grandchildren using IRS Form 4547.
Please note that because the program is new, operational, tax, and legal guidance may continue to evolve. Families should consult qualified tax, legal, and financial professionals before making decisions.
What Is a Trump Account?
A Trump Account is a new savings account designed to help families begin building assets for a child’s future. The account is structured as a type of traditional IRA for children, but with special rules while the child is still a minor.
During the child’s younger years, called the “growth period”, the account is designed for long-term growth rather than short-term spending. Earnings will generally grow tax-deferred (state dependent, more on this below), and distributions are not allowed prior to age 18. At age 18, the account is out of the “growth period” and distributions are allowed. Distributions are generally taxed under traditional IRA rules: amounts attributable to after-tax contributions are returned tax-free as basis, while earnings and certain non-basis contributions are taxable as ordinary income. Withdrawals may also be subject to the 10% early-distribution penalty unless an exception applies.
Bank of New York Mellon, commonly known as BNY, will serve as Treasury’s financial agent to help establish the initial accounts and support development of the Trump Accounts app. Robinhood will serve as the brokerage and initial trustee while also aiding BNY with app development.
Who Is Eligible?
Children who are U.S. citizens, have a valid Social Security number, and have not turned age 18 before the end of the calendar year may be eligible to have a Trump Account established on their behalf. The account must be opened by an authorized individual, which generally means the child’s legal guardian, parent, adult sibling, or grandparent, in that order of priority.
These accounts may be especially important for children under age 10 and children born between January 1, 2025 and December 31, 2028, because they may qualify for free pilot or seed contributions.
Children born between January 1, 2025 and December 31, 2028, with a valid Social Security number, will qualify for a $1,000 pilot program contribution from the U.S. Treasury. This contribution is requested by submitting IRS Form 4547.
There is also a notable private contribution opportunity. The Michael & Susan Dell Foundation announced a $250 contribution for up to 25 million children age 10 and under who live in a ZIP code with median household income below $150,000. Because this commitment is capped, it may be limited to the first group of eligible activated accounts once the program begins processing them. Families with children under age 10 may want to act promptly.
Growth Period Rules
Trump Accounts have two important phases: the growth period and the period after the growth period. Understanding the difference is important because the rules change once the child reaches age 18.
The growth period refers to the years before the child turns 18. During this time, Trump Accounts are primarily designed for accumulation and long-term growth. Contributions may be allowed from parents, grandparents, family members, employers, charitable organizations, government entities, and certain other qualified sources.
During the growth period, investment options are limited to eligible low-cost equity index investments. Distributions are also generally restricted before age 18, which means the account is not designed to function like a regular savings account for short-term needs.
Employer contributions may also become part of the Trump Account landscape. Employers may be able to contribute to an employee’s Trump Account or to the Trump Account of an employee’s dependent, subject to separate rules and limits. This could eventually become a new employee benefit for working parents.
Qualified general contributions are another potential funding source. These may be made by charitable organizations, government entities, or similar groups for a qualifying class of children. The Dell contribution is an example of how outside organizations may provide additional funding beyond what a family contributes directly.
Families should also be aware of contribution limits during the growth period. Regular contributions are generally limited to $5,000 per year per child, indexed for inflation after 2027. Employer contributions are limited to $2,500 per year, but they count toward the overall $5,000 limit. Some special contributions, such as the $1,000 pilot program contribution and qualified general contributions, may be treated separately.
Gift tax note: Direct contributions from third parties, such as grandparents or other family members, may create gift tax reporting requirements. Under current rules, these contributions will be treated as gifts of a future interest because the child generally cannot access the account until age 18. As a result, the gift may not qualify for the annual gift tax exclusion and may count against the contributor’s lifetime gift and estate tax exemption, potentially requiring the filing of IRS Form 709. This could be clarified or corrected in future guidance, so third-party contributors should consult their advisor before contributing.
South Carolina-specific note: As of the date of this post, South Carolina may tax annual earnings inside Trump Accounts, but this treatment has not been finalized. Families should watch for future state guidance or consult their advisor before assuming the account will receive the same treatment at the state level as it does federally.
What Happens After the Growth Period?
Once the growth period ends, the account begins to look more like a traditional IRA. At that point, the beneficiary generally has more options, but those options can come with tax consequences.
After the child reaches January 1 of the age-18 year, the account beneficiary generally has four broad choices. They may take a distribution, keep the funds in the Trump Account, roll the funds into a traditional IRA, or convert some or all of the account to a Roth IRA.
Each option has different planning implications. Taking a distribution may provide access to the funds, but it could create taxable income and may trigger penalties if no exception applies. Keeping the funds invested or rolling them to a traditional IRA may preserve tax-deferred growth. A Roth conversion may be attractive if the child has little or no income, but the conversion itself may create taxable income and could raise kiddie tax considerations.
This is where planning becomes valuable. A Trump Account may begin as a simple way to claim available seed money, but the best long-term outcome may depend on what happens after the child reaches age 18. Families should carefully consider whether the account is best preserved for retirement, converted to Roth over time, used for education or a first home, or coordinated with other savings strategies. It can also create a natural opportunity for a family planning conversation with an advisor, while helping the next generation build financial literacy along the way.
How Do Trump Accounts Fit With Other Savings Options?
Trump Accounts can be valuable, but they are not necessarily the best account for every goal. The right savings vehicle still depends on what your family is trying to accomplish.
For education savings, a 529 plan may still be the preferred account because it is specifically designed for education expenses and can offer tax-free withdrawals when used for qualified education costs. A Trump Account is better viewed as a retirement-style or long-term wealth-building account, although funds may become accessible after age 18, subject to taxes and potential penalties.
Families may also consider custodial accounts, taxable investment accounts, savings accounts, ABLE accounts, or trusts depending on the child’s needs and the family’s goals. The main point is that Trump Accounts should complement, not replace, a thoughtful savings strategy.
How to Sign Up
- The first step is to visit the official Form 4547 online portal and submit the election for each eligible child:
https://form.trumpaccounts.gov/ - Once Form 4547 is submitted, Treasury or its agent is expected to send information with next steps to activate the account. Filing the form starts the process, but the account still needs to be activated.
- The program is expected to launch on July 4, 2026, and personal contributions may begin then. The $1,000 pilot program contribution is not guaranteed to be deposited exactly on July 4. IRS guidance indicates it will be deposited as soon as practicable after the election is made and the account has been opened and confirmed, but not before July 4, 2026.
Bottom Line
Trump Accounts are still new, and details will continue to evolve. But for families with eligible children, the first step is relatively simple: submit Form 4547 and activate the account. Doing so may help secure the $1,000 pilot program contribution, position your child for potential private, employer, charitable, corporate, or government contributions, and give those dollars more time to compound.
At the same time, Trump Accounts should be viewed as one piece of a broader savings strategy. A 529 plan may still be the better tool for education, while a Trump Account may be better suited for long-term wealth building and retirement-style savings. Once the child exits the growth period, decisions around distributions, rollovers, or Roth conversions can have meaningful tax consequences.
For many families, a few minutes today could be a meaningful start toward a child’s long-term financial future. If you have questions about opening a Trump Account now, or how to plan for the more complex decisions after the growth period, please reach out to one of our team members and we would be happy to continue the conversation.
Sources
Treasury Department Press Releases: https://home.treasury.gov/news/press-releases
IRS Instructions for Form 4547: https://www.irs.gov/instructions/i4547#d0e145
Trump Accounts: https://trumpaccounts.gov/
U.S. Census Bureau: https://data.census.gov/profile
Investment News: https://www.investmentnews.com/retirement-planning/as-trump-accounts-near-blastoff-questions-around-implementation-continue-to-swirl/266497
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Kitces Webinar Slides, Breaking Down Sec. 530A “Trump” Accounts, 05.19.2026.
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