The Working Families Tax Cuts Act created Trump Accounts, a new custodial-style savings account for minors.
While the concept has received attention, particularly around the government-funded $1,000 contribution, key implementation details are still evolving.
Here’s what we know today.
Eligibility
Trump Accounts can be opened by parents and guardians for children under age 18, provided the child is a U.S. citizen with a valid Social Security number. Only children born between January 1, 2025 and December 31, 2028 are eligible to receive the $1,000 government seed contribution.
Contributions
Up to $5,000 per year can be contributed to a Trump Account, combined across all contributors, which can include individuals, employers, nonprofit organizations, and local governments. The government seed contribution does not count toward the annual contribution limit.
Taxation and Withdrawals
Trump Accounts grow on a tax-deferred basis, meaning investment earnings are not taxed while funds remain in the account. After age 18, funds can be withdrawn for eligible expenses, such as education or a first home purchase, and will generally be taxed as ordinary income. Early withdrawal penalties may apply if funds are withdrawn prior to age 18 or used for non-eligible expenses.
While the general tax framework is clear, important details such as how different contribution types will be taxed upon withdrawal and how IRA rules will apply after age 18 are still pending final IRS guidance.
Investments
Investment options for Trump Accounts are meant to be simple, low-cost, and U.S.-based. Investments are limited to index-based mutual funds or ETFs with at least 90% invested in U.S. companies, no use of leverage, and expense ratios capped at 0.10%.
How to Open a Trump Account & Account Administration
The IRS expects Trump Accounts to become available July 4, 2026. Parents and guardians can make an election to enroll their child by filing Form 4547 with their tax return or by using the online tool available on trumpaccounts.gov.
The U.S. Treasury will select a financial institution to receive the $1,000 opening deposit, and parents or guardians will be notified when it’s time to activate the account. Accounts may be moved to a preferred financial institution at a later date.
Our Perspective
The $1,000 government contribution is a meaningful starting point, but it’s just that, a starting point. The long-term impact will come from consistent contributions, disciplined investing, and time. It will also be important to evaluate how Trump Accounts fit alongside existing strategies like 529 plans, UTMAs/UGMAs, and custodial IRAs. For now, the right move is to stay informed and be ready to act once the rules and process are fully finalized, rather than making decisions based on incomplete guidance.
