07/16/2026
Trump Account Basics
The highly publicized Trump Accounts are now available to families with children under the age of 18. If a child is a U.S. citizen born between January 1, 2025, and December 31, 2028, the account may also be seeded with a one-time $1,000 contribution from the federal government. Accounts can otherwise be opened for any child with a valid Social Security number who is under age 18 at the end of the year in which the account is opened.
Up to $5,000 may be contributed to each account per year. This is a combined limit for most contributions made by family members and other individuals. The government’s $1,000 contribution does not count against that limit.
Unlike IRA contributions, money contributed personally to a Trump Account does not qualify for an income-tax deduction. Those contributions do, however, create “after-tax basis” in the account.
Interestingly, employers can choose to contribute as much as $2,500 per year to an account of an employee’s dependent through a Section 128 employer contribution program. That contribution would count toward the $5,000 annual limit, but generally would not be included in the employee’s taxable income. Because different types of contributions receive different tax treatment, future withdrawals may not be 100% taxable.
Growth within the account is tax deferred. Money generally cannot be withdrawn before January 1 of the year in which the child turns 18. After that point, most of the special Trump Account restrictions end and the account generally becomes subject to the normal rules for traditional IRAs.
Strategy note: At age 18, the account could be converted to a Roth IRA. The young adult would owe income tax on the taxable portion of the amount converted, but the after-tax basis in the account would generally not be taxed again.
A Roth conversion could be an attractive strategy because an 18-year-old may be in a much lower income-tax bracket than he or she will be later in life. After the conversion, future qualified Roth IRA withdrawals, including future growth, could eventually be received tax-free in retirement.
Families can sign up through the official Trump Accounts portal at www.trumpaccounts.gov. or download the Trump Accounts app from the Apple App Store or Google Play. The account can also be opened by submitting IRS Form 4547. The online process requires the applicant to verify his or her identity, create login credentials, and provide information such as the child’s name, date of birth, address, and Social Security number.
A legal guardian or parent will ordinarily make the application. In certain circumstances, an adult sibling or grandparent may also be permitted to do so. Once the election is processed and the account is activated, the person who opened the account generally becomes the responsible party and manages the account while the child is a minor.
Critics have noted that Trump Account funds generally cannot be distributed during childhood. Once withdrawals are allowed at 18, the government contribution, and employer contributions, and earnings, will generally be taxed as ordinary income. Personally-contributed after-tax amounts will not be taxed again, and withdrawals will usually contain a proportional mixture of taxable and nontaxable money.
This tax treatment differs from a taxable brokerage account, where investment gains may qualify for lower long-term capital-gains tax rates. A brokerage account invested in lo- or no-dividend funds could offer greater flexibility and, in some circumstances, more favorable tax treatment. Brokerage accounts also do not have an annual contribution limit or prohibition against childhood withdrawals.
Finally, there is not much investment flexibility within Trump Accounts. The U.S. Treasury Department, which oversees the program, has announced that all contributions will initially be invested in the State Street SPDR Portfolio S&P 500 ETF (SPYM), a broad index fund with an expense ratio of 0.02%.
Over time, account holders are expected to be able to select from several additional broad-market index funds, including the iShares Core S&P 500 ETF, the Vanguard Total Stock Market ETF, the State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF, and the iShares Core S&P Total U.S. Stock Market ETF.
For families eligible for the government’s $1,000 contribution, opening a Trump Account may be an easy decision. Whether it makes sense to contribute substantial additional amounts will depend on the family’s goals, tax situation, need for flexibility, and other savings options
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Trump Accounts provide eligible American children with tax-advantaged investment accounts courtesy of President Donald J. Trump.
