Trump Accounts: What We Think Matters Most for Families

Trump Accounts: What We Think Matters Most for Families

Trump Accounts officially opened for contributions on July 4, 2026. We wanted to send a quick note covering what we think matters most for families with kids or grandkids under the age of 18, the eligibility age for these accounts. These accounts are a new addition to the savings toolkit alongside 529 plans, custodial Roth IRAs, and UGMA/UTMA accounts. We're here to help families determine how they best fit into the mix.

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A Few Things Worth Knowing

• The $1,000 federal seed is available only to children born in 2025 through 2028. Older children can still open Trump Accounts, but they will not receive the federal contribution.
• There is one annual cap of $5,000 per child, shared across all contributor types. Anyone (parents, grandparents, family friends, or the child themselves) can contribute, but the combined total from individuals and employers cannot exceed $5,000 per year. Of that, employers can fill up to $2,500. The cap will be inflation-indexed starting in 2028. The $1,000 government seed and qualifying charitable contributions do not count toward the cap.
• Accounts are invested in low-cost U.S. equity index funds. Think broad market index funds and ETFs with expense ratios capped at 0.10%. The investment menu is intentionally narrow during the "growth period" before the child turns 18. After 18, the account operates like a traditional IRA with broader investment options.
• Withdrawals are generally restricted until age 18. After that, standard IRA distribution rules apply, including a 10% early withdrawal penalty before age 59½ on the taxable portion of any distribution.
• No earned income is required. Unlike a custodial Roth IRA, a child does not need to have earned income for contributions to be made on their behalf. And for teenagers who do have earned income, Trump Account contributions do not affect their eligibility to also contribute to a separate IRA. The two accounts have separate contribution limits.

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What the Growth Could Look Like

The numbers are illustrative, but they help frame the opportunity. These assume the $1,000 government seed deposit at birth and historical S&P 500 averages:

Note: For illustrative purposes only. Actual results will differ and are not guaranteed.

Even at the modest $250/year level, a child could enter adulthood with a meaningful head start. At the maximum, the numbers start to look like a real retirement foundation. 

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How Trump Accounts Compare

For families already using a 529, the question we get most often is: should we add a Trump Account, replace the 529, or skip it entirely?

The short answer: if education funding is your primary goal, the 529 is still the better tool. It offers tax-free growth, tax-free withdrawals for qualifying education expenses, potential state income tax deductions, and a broader investment menu. Trump Accounts do not offer any of those features for education spending.

Where Trump Accounts may play a role is for families thinking beyond college. The money grows tax-deferred with no restrictions on what it can eventually be used for (subject to standard IRA rules after age 18). For families who are already fully funding a 529 and want to do more, or for families whose children may not attend college, Trump Accounts offer a different kind of flexibility.

The two are not mutually exclusive. For some families, the right answer might be both.

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How the Accounts Are Managed

A parent or guardian can open a Trump Account by filing IRS Form 4547 with their 2025 (or later) tax return, or through the online portal at TrumpAccounts.gov. Each child may have only one account.

Currently, all initial Trump Accounts are created and administered by the U.S. Treasury Department. The Treasury has partnered with BNY (Bank of New York Mellon) and Robinhood to serve as the initial designated financial agents and trustees holding the assets.

If you prefer to keep your investments at a specific financial institution, the Treasury has stated that over time, families will be allowed to roll these initial accounts over to other approved brokerages and providers once those institutions launch their own Trump Account products.

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A Planning Opportunity Worth Flagging: Roth Conversion at 18+

This is the detail that gets our attention as planners. Once the growth period ends at age 18, a Trump Account operates as a normal IRA which can then be converted into a Roth IRA. If the young adult has low taxable income at that point (say, during college or their early career), the Roth conversion could generate a modest tax bill while locking in decades of tax-free growth. For a child born today, that could mean 40+ years of compounding inside a Roth.

One important caveat: if the child is still claimed as a dependent at 18, kiddie tax rules may apply, meaning the conversion income could be taxed at the parents' marginal rate rather than the child's lower rate. Timing matters.

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A Few Cautions Worth Mentioning

State tax treatment is uneven. California, for example, does not currently conform to the federal rules, which can change the math meaningfully at the state level. Massachusetts and several other states may also tax annual earnings inside the account. The IRS is also still finalizing certain regulations, including gift tax treatment for grandparent contributions.

Financial aid impact is unclear. Trump Accounts are likely considered student-owned assets for FAFSA purposes, which could affect college financial aid eligibility. This is worth factoring in for families where financial aid is part of the equation.

Recordkeeping matters more than it might appear. Personal contributions are after-tax; the federal seed, employer matches, and charitable contributions are pre-tax. They are taxed differently when withdrawn, and clean records from day one will keep things simple later. The Trump Account is always tracked separately from any other IRAs the beneficiary may have, so these records need to stand on their own.

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Let's Talk

If you have a child or grandchild who could benefit, or you simply want to make sense of how this fits into what you already have in place, let's talk. The decision is more individualized than it might appear, and the time to think it through is before you contribute, not after.

As always, we are here to help.