What Are Trump Accounts? | Convivial Wealth

A Trump account is a new kind of individual retirement account (IRA) for children under 18, created by the 2025 federal tax law. Family, employers and some charities can add money, and the U.S. Treasury puts in a one-time $1,000 for eligible children born from 2025 through 2028. The money is invested in low-cost stock index funds and stays locked until the year the child turns 18.

1. What a Trump account is and who can have one

Trump accounts come from the tax law signed on July 4, 2025 (Public Law 119-21), which the IRS calls the Working Families Tax Cuts and many people call the One Big Beautiful Bill Act. The rules are in section 530A of the tax code.

The IRS treats a Trump account as a type of traditional IRA, a retirement account where growth isn't taxed until money comes out. The account is in the child's name, and a parent or another adult manages it until the child turns 18.

Any child with a valid Social Security number can have one, as long as they won't turn 18 before the end of the year it's opened. The child doesn't need to be a U.S. citizen, and there's no family income limit.

2. The $1,000 from the federal pilot program

The law created a pilot program, a trial that runs for a limited time, under which the Treasury deposits a one-time $1,000 for each child who meets all of these rules:

Born from January 1, 2025, through December 31, 2028
A U.S. citizen
Has a Social Security number issued before the request is made
Hasn't already had a pilot request processed by anyone else

To get the money, a parent or guardian has to elect it, which means formally requesting it, by checking the pilot program box on IRS Form 4547. The $1,000 doesn't count toward the yearly contribution limit.

3. How to open or claim an account

Starting October 1, 2026, the Treasury automatically opened Trump accounts for eligible children. If your child has one, you still need to claim it before you can manage it, which you do in the official Trump Accounts app from the Apple App Store or Google Play by verifying your identity and your right to manage the account.

Form 4547, Trump Account Election(s), is what you use to get the $1,000 or to open an account for a child who doesn't have one. You can file it in the app, on trumpaccounts.gov, through your IRS Individual Online Account, with your e-filed tax return or by mail. Your child's name, Social Security number and birth date must match Social Security records exactly, or your request may be delayed.

The adult who opens the account becomes the responsible party, who chooses the investments. For help, call 866-USA-4547.

4. Who can contribute, and how much

The first contributions were allowed on July 4, 2026, and the child doesn't need earned income to receive them.

For 2026 and 2027, the limit is $5,000 per child per year, shared by everyone who gives. The law adjusts it for inflation in years after 2027, and the IRS will post the new figure then. Here's how each source fits:

Who gives	How much	Counts toward the $5,000?
Parents, grandparents, other relatives and friends	Any amount, as long as the combined total stays within $5,000	Yes
An employer	Up to $2,500 per employee per year, tax-free to the employee	Yes
The Treasury pilot program	A one-time $1,000	No
State, local and tribal governments, and 501(c)(3) charities	At least $25 per child, given to a whole group of children	No

An employer can contribute to an employee's own account or a dependent's, but the $2,500 limit is per employee, not per child. Government and charity money, which the IRS calls qualified general contributions, must go to a whole group, such as all children in one state or born in one year.

Family gifts also fall under federal gift tax rules. For 2026, IRS Revenue Procedure 2026-25 says most people who give only cash to Trump accounts, and give each child no more than $19,000 in total for the year, don't need to file a gift tax return.

5. How the money is invested

Until the year the child turns 18, the money must be in an index fund, a mutual fund or exchange-traded fund (ETF) that copies a list of mostly U.S. companies, such as the S&P 500, instead of having a manager pick stocks.

The fund can't use borrowed money to boost returns, and its yearly fees can't be more than 0.1% of the balance. That's at most $1 a year for every $1,000, so a child with $18,000 invested would pay no more than $18 a year.

If the responsible party doesn't choose a fund, the trustee picks one. These rules come from the law and from detailed IRS rules proposed in August 2026, which aren't final yet, so some details could change. Because the money is all in stocks, the balance will rise and fall with the market.

6. How Trump accounts are taxed

Contributions aren't tax-deductible, with one exception for employer money, which isn't counted as the employee's income up to the $2,500 limit.

The growth is tax-deferred, meaning no one pays tax on it while it stays in the account. When money comes out, the tax depends on where it came from:

Family contributions come out tax-free because tax was already paid on them, and the IRS calls this money your basis.
Growth, the $1,000, employer money and government or charity money are taxed as regular income, because no one paid tax on them going in.

Each withdrawal is part taxable and part tax-free, based on how much of the account is basis. State income tax rules may not match the federal ones, so check with your state's tax department.

7. What happens at 18, and the rules for withdrawals

The locked period, which the IRS calls the growth period, ends on December 31 of the year the child turns 17. From January 1 of the year they turn 18, the account follows regular traditional IRA rules, and the child takes control once they're an adult.

During the growth period, money can come out only to move the whole account to another Trump account, to roll it into an ABLE account (savings for people with disabilities) in the year the child turns 17, to fix an excess contribution, or after the child's death.

After 18, withdrawals before age 59½ usually face a 10% additional tax on the taxable part, on top of regular income tax. IRS exceptions to the 10% include college costs, up to $10,000 toward a first home, up to $5,000 for a birth or adoption, and total and permanent disability.

8. Private pledges, including the Dell gift

In December 2025, Michael and Susan Dell pledged $6.25 billion to put $250 into the accounts of 25 million children. Invest America, the group running the gift, says it's for children born from 2016 through 2024, who are too old for the federal $1,000, and that eligibility depends on where the child lives. It also says the $250 deposits were finished in October 2026. These details come from Invest America rather than the IRS, so check its website, listed in the sources below, to see whether your child qualifies.

In remarks in January 2026, the Treasury Secretary said Ray and Barbara Dalio had pledged $75 million for children in Connecticut and that several employers plan to contribute.

9. How Trump accounts compare with other accounts for kids

Each account fits a different goal, as this table shows:

	Trump account	529 plan	Custodial (UTMA) account	Roth IRA for a child
Main purpose	Long-term savings	Education	Anything that benefits the child	Retirement
Yearly limit	$5,000 combined (2026 and 2027)	None set by the IRS; each plan has a lifetime cap	None	Child's earned income, up to $7,500 for 2026
Child needs a job?	No	No	No	Yes
Investments	U.S. stock index funds only, until the year the child turns 18	The plan's menu	Almost anything	Almost anything
Tax on growth	Taxed as income when withdrawn	Tax-free for qualified education	Taxed each year; kiddie tax can apply	Tax-free when withdrawals are qualified
Money available	From the year the child turns 18	Any time for school costs	Any time, for the child's benefit	Contributions any time
Control	Parent or other adult until 18, then the child	The owner, usually a parent	Custodian until an age set by state law, usually 18 or 21, then the child	Custodian until adulthood, then the child

Some states, including New York, also give a state tax deduction for 529 contributions, as our New York 529 guide explains. You can compare 529s with custodial accounts in 529 plans vs. custodial accounts, and our Roth IRA guide covers how a teen with a summer job can open one.

10. Who might use one, and the trade-offs

For an eligible child born from 2025 through 2028, electing the $1,000 costs nothing, and you never have to add more. It may also suit families whose employer contributes. Before adding your own money, weigh these trade-offs:

Locked money. Nothing comes out before the year the child turns 18, even in an emergency.
Taxed withdrawals. Growth is taxed as income, unlike a 529 used for school or a qualified Roth IRA withdrawal.
Control at 18. The child decides how to use the money.
Narrow choices. Until the year the child turns 18, you can't shift to safer investments as a goal gets closer.

11. A worked example: Maya's account

Maya was born in 2026, and her parents elect the $1,000 when they claim her account. To keep the math simple, the example assumes the $1,000 arrives at the end of 2026. Her grandparents add $500 at the end of each year for 18 years, from 2026 through 2043, the year she turns 17. Assuming a 6% average yearly return, which is only an example, here's how it could grow:

	With only the $1,000	With $1,000 plus $500 a year
Total put in	$1,000	$10,000
Value at about age 18	$2,693	$18,146
Value at about age 30, with no more deposits	$5,418	$36,513

At about age 30, $9,000 of Maya's $36,513 is her grandparents' basis and comes out tax-free. The other $27,513 would be taxed as income when withdrawn, and the 10% additional tax would apply to it too unless she qualifies for an exception, such as using up to $10,000 toward a first home. You can try your own numbers in the investment growth calculator below.

Investment growth calculator

See how money you invest regularly could grow. Change any number to try your own. The yearly return is an assumption, not a promise: real returns go up and down, and some years lose money.

Hypothetical example. It assumes the same return every year, deposits at the end of each month, and no fees, taxes or inflation. Real investments can lose value. Open the full investment growth calculator for more options.

Common mistakes with Trump accounts

Not electing the $1,000. An account opened automatically doesn't get the $1,000 until you elect it on Form 4547, which you can do in the app.
Not claiming the account. You can't add money or choose investments until you claim it.
Going over $5,000. Parents, relatives and an employer all share one limit for each child.
Treating it as an emergency fund. The money is locked until the year the child turns 18.

Frequently asked questions

Does my child have to be a U.S. citizen?

Only for the $1,000. To have the account itself, a child needs a valid Social Security number and must be under 18.

Can I take money out early for a medical bill?

No. Before the year the child turns 18, money can come out only for rollovers, excess contributions or the child's death.

Should I use a Trump account or a 529 for college?

A 529 usually comes out ahead for college because its growth is tax-free for school costs. You can also use both, with the $1,000 in a Trump account and college savings in a 529.

The bottom line

A Trump account is a locked, low-cost stock index account for a child, with a one-time $1,000 federal deposit for eligible children born from 2025 through 2028. For eligible families, claiming the account and electing the $1,000 takes only a few steps. Before adding your own money, compare it with a 529, a custodial account or a Roth IRA, since withdrawals are taxed and the child takes control at 18.

Sources and further learning

Convivial Wealth education guide · General education for U.S. readers, not personalized tax or investment advice. Rules are as of November 2026, are still being finalized, and are reviewed each year.

Read our full educational disclaimer.