By Jeff Herman
This year marks the launch of a new, federally supported savings vehicle designed to help American families begin building long-term financial security for their children. Known as Trump Accounts, these investment accounts are intended to give children a financial head start by allowing savings to grow over time through disciplined, long-term investing.
The Most Important Step Parents Must Take
This is the most important thing to know about Trump Accounts: They are NOT created automatically. Parents must take action to open them.
Parents must complete IRS Form 4547 to:
- Elect to establish a Trump Account for an eligible child
- Elect participation in the $1,000 Treasury pilot contribution, if the child qualifies
Form 4547 may be filed at any time, including with the parent’s 2025 income tax return.
Beginning in mid-2026, parents will also be able to complete this election through an online account at trumpaccounts.gov.
After the election is made, beginning in May 2026, the Treasury or its designated agent will contact the parent or guardian to complete an authentication process and formally activate the account.
What Is a Trump Account?
A Trump Account is a tax-deferred investment account created for children under age 18. The account is designed to grow over time through investment earnings. When the child reaches adulthood, the account generally functions like a traditional IRA, allowing the funds to continue compounding and eventually be used for long-term financial goals.
Who Is Eligible to Open a Trump Account?
Any child under the age of 18 with a valid Social Security number is eligible to have a Trump Account opened on their behalf.
A parent or legal guardian is responsible for opening and managing the account while the child is a minor. When the child turns 18, ownership of the account transfers to them, and the account continues under adult rules.
What Is the $1,000 Government Contribution?
For children born between calendar years 2025 and 2028, the federal government offers a one-time $1,000 contribution to help seed the account.
To qualify:
- The child must be a U.S. citizen with a valid Social Security number
- A parent or guardian must open the Trump Account before the year the child turns 18
The U.S. Treasury makes this $1,000 contribution and does not count toward the annual $5,000 contribution limit.
Families and other contributors may still add up to $5,000 per year per child, subject to program rules.
Who Can Contribute to a Trump Account?
Contributions may be made by:
- Parents or legal guardians
- Grandparents and other family members
- Friends
- Employers (up to $2,500 per employee per year, excluded from the employee’s income)
In addition, qualifying charitable organizations and government entities (such as states, tribes, or local governments) may make contributions for children in a “qualified class” (for example, all children born in a specific year or within a specific state). These contributions do not count toward the annual $5,000 limit.
How Are the Funds Invested?
All Trump Accounts are initially created and held with the U.S. Treasury’s designated financial agent. At a later date, parents or guardians may transfer the full account balance to a preferred brokerage firm through a trustee-to-trustee rollover.
By law, Trump Accounts may only be invested in broad U.S. equity index funds that:
- Track the overall U.S. stock market (such as the S&P 500)
- Do not use leverage
- Charge no more than 0.10% in annual fees
This structure is designed to emphasize diversification, low cost, and long-term growth.
The Bottom Line
In many ways, a Trump Account functions like establishing a traditional IRA at birth. The account holder may continue contributing subject to applicable rules, and withdrawals generally follow traditional IRA guidelines.
Early withdrawals may be subject to a 10% additional tax before age 59½ unless an exception applies, such as distributions for:
- Qualified higher-education expenses
- First-home purchases
The annual contribution limit is $5,000 per child, with cost-of-living increases beginning after 2027. Certain charitable and government contributions may be made in addition to this limit.
For parents focused on long-term planning, Trump Accounts represent a structured way to put time and compounding to work early when they matter most.