One of the many changes brought about by the One Big Beautiful Bill Act was the creation of the “Trump Accounts” program for children. You’ve likely heard about this new program, but you might be wondering what the rules and details are. Grace & Growth Financial Services has your back when it comes to navigating new tax developments – keep reading for Trump Accounts explained.
What is a Trump Account?
A Trump Account is a unique type of traditional individual retirement account (IRA) for children. The program starts in mid-2026 and applies to American children under 18. These investment accounts are subject to certain special rules that do not apply to other types of individual retirement accounts during the “growth period.” Importantly, these accounts also come with a one-time $1,000 pilot program contribution into the accounts for children born between 2025 and 2028.
Who is Eligible for a Trump Account?
A child may become an “account beneficiary” of a Trump Account established for them if they are under 18 by the end of the year in which the election for the account was made and if they have a valid Social Security Number.
Trump Accounts Explained: Key Rules and Details
- Though you can submit the form now, the Trump Account program is launching on July 4, 2026.
- Authorized individuals, such as parents or legal guardians, can elect to open accounts for eligible children under 18.
- The “initial growth period” of a Trump account begins when the initial account is established and ends on December 31st of the year in which the account beneficiary of the account reaches the age of 17.
- Up to $5,000 can be contributed per year per child (by those other than employers).
- Trump Accounts are different from typical traditional retirement or savings accounts because they follow a unique set of rules during the early growth period.
- The growth of the account funds is also tax-deferred, meaning that the funds are taxed upon withdrawal rather than while growing.
- At the end of the initial growth period (during the calendar year in which the child turns 18), the fund transfers to the ownership of the child beneficiary; at this point, the account automatically becomes a traditional IRA and the funds can be used for things like education expenses or first home purchases (this would be subject to certain restrictions and would be taxed at ordinary income rates). The beneficiary can also keep the account active and continue to contribute for future savings.
What is the $1,000 Contribution?
American children born between January 1, 2025, and December 31, 2028, may be eligible to receive a one-time contribution of $1,000 from the federal government into their accounts. After this initial deposit, additional contributions from parents, families, and friends are optional.
Can Employers Contribute to a Trump Account?
Yes, employers can make tax-deductible contributions to the Trump Account of an employee or a dependent of an employee, up to $2,500 per year.
How to Open a Trump Account
Trump Accounts can be opened, and pilot program contributions requested, for eligible children by using IRS Form 4547, either on the IRS website or the official Trump Accounts website.
You can:
- Submit the information online on the official Trump Accounts website,
- File the form when you file your taxes, or
- Prepare and mail the form separately.
Once you have completed and submitted that information, the IRS will reach out to you to activate the account.
Where to Learn More
- The official Trump Accounts website – You can also complete the Form 4547 information online by clicking the “Get Started” button.
- The IRS instructions for completing Form 4547
- The IRS Form 4547
Have more questions? Contact us today for guidance & clarity.
