Trump Accounts for Children
Trump accounts are a new tax-deferred investment account for children under 18. Families can put in up to $5,000 a year starting July 4, 2026, employers can add up to $2,500 of that tax-free to the employee, and U.S.-citizen babies born 2025 through 2028 can receive a $1,000 federal deposit.
Reviewed by Ebot Mbi, CPA, EA · Last reviewed October 9, 2026
Who it fits
- Parents of children born 2025 through 2028, who can claim the $1,000 federal deposit
- Families that want long-term, low-cost stock-index savings for a child
- Business owners who want to offer an employer contribution as a benefit
- Grandparents who want to give to a grandchild in a tax-deferred account
Who it's not for
- Families who need the money for education soon; a 529 plan is usually a better fit
- Anyone expecting a current-year tax deduction for their own contributions
- Children 18 or older
How it works
The account is opened for a child under 18 with a Social Security number. Contributions from family and others are limited to $5,000 a year in total and can begin July 4, 2026. Your contributions are not deductible.
Investments are limited to low-cost funds that track a broad U.S. stock index. Growth is tax-deferred while the money stays in the account.
An employer can contribute up to $2,500 a year per employee's child, and that amount is excluded from the employee's income. It counts toward the $5,000 annual limit.
For U.S.-citizen children born in 2025 through 2028, the Treasury will deposit $1,000 as a pilot contribution once the parent elects it.
No withdrawals are allowed before the year the child turns 18. After that, the account generally follows traditional IRA rules: withdrawals of earnings are taxed, and early withdrawals can carry penalties unless an exception applies.
Illustrative example
Illustrative: a child born in 2026 receives the $1,000 federal deposit. Starting that year, the family contributes $5,000 a year for 18 years. The account is assumed to grow at 7% a year, with contributions at each year-end. Actual returns will differ.
- Total family contributions: $5,000 × 18 years = $90,000
- Value of contributions after 18 years at 7%: $5,000 × 34.00 (annuity factor) ≈ $170,000
- Value of the $1,000 deposit after 18 years: $1,000 × 3.38 ≈ $3,380
- Projected account value: $170,000 + $3,380 ≈ $173,380
- Growth sheltered from annual tax: $173,380 − $90,000 − $1,000 ≈ $82,380
About $82,000 of growth compounds without annual tax, and is taxed only when withdrawn under IRA-style rules.
The rules
| Rule | Citation |
|---|---|
| A Trump account is a tax-deferred account for a child under 18, with contributions limited to $5,000 a year. | IRC §530A (added by P.L. 119-21) |
| Employer contributions up to $2,500 a year are excluded from the employee's income. | IRC §128 |
| A $1,000 federal pilot contribution is available for U.S.-citizen children born 2025 through 2028. | IRC §6434 |
| No distributions before the year the child turns 18; after that, IRA-style rules generally apply. | IRC §530A |
Watch-outs
- The $1,000 deposit requires an election; it is not automatic. Make it with the first return that claims the child.
- Withdrawals of growth are taxable, unlike qualified 529 or Roth withdrawals. Compare before choosing where each dollar goes.
- Gifts into the account count toward the donor's $19,000 annual gift exclusion per recipient.
- IRS guidance is still being issued. Rules on account providers and elections may change.
What we do
We make the election for the federal deposit, compare a Trump account with a 529 and a custodial Roth for your goals, and help business owners set up an employer contribution program that meets the rules.
Questions
Can I deduct my contributions?
No. Parent and family contributions are made with after-tax dollars. The benefit is tax-deferred growth.
My child was born in 2024. Can we still open one?
Yes, if the child is under 18. The $1,000 federal deposit is only for children born 2025 through 2028.
Does my company's $2,500 contribution count against the $5,000 limit?
Yes. Employer contributions are part of the $5,000 annual limit, leaving room for $2,500 from the family.