Below is a high-level overview of the new tax-advantage investment account designed to help children begin building savings and investment assets from an early age. As always, if you’d like to talk further about how this can fit into your existing tax planning strategy, please reach out to your SL contact.
What are Trump Accounts?
Trump Accounts are a new type of tax‑advantaged investment account created under the One, Big, Beautiful Bill Act (signed into law July 4, 2025). The Treasury and IRS issued initial guidance in Notice 2025‑68 on December 2, 2025. These accounts are designed to help children begin building savings and investment assets from an early age.
Who is eligible?
- An account may be established for any individual who has not attained age 18 by the end of the calendar year and who has a valid Social Security number.
- The child is the owner and beneficiary of the account.
- U.S. citizens born between 2025 and 2028 are eligible for a $1,000 Treasury pilot contribution.
- Certain eligible children 10 years old or younger as of the rollout period receive $250 of seed funding from the Michael and Susan Dell donation if they live in a ZIP code with median household income of $150,000 or less.
Investment and Tax Benefits
- Contributions are not included in the child’s income.
- Investment growth is tax‑advantaged.
- During the growth period, funds must be invested in low‑cost, broad U.S. equity index funds (such as S&P 500‑type funds).
- Distributions are generally restricted until the growth period ends.
- After the growth period, the account generally follows traditional IRA rules and may be rolled into an IRA or, in some cases, a qualified plan.
Growth Period and Contributions
Once established, the account has a “growth period” that generally lasts until the end of the year before the child turns 18. During this period, contributions may be made by parents, relatives, friends, employers, and certain charities, including:
- $1,000 Treasury pilot program contributions (where eligible)
- Qualified general contributions from governments or 501(c)(3) organizations
- Employer contributions (up to $2,500 per year, subject to limits)
- Qualified rollover contributions
- Other contributions from family or friends
Annual contributions from employers and other private sources are generally capped at $5,000 per year (for 2026–2027, indexed thereafter). Certain contributions, including the Treasury pilot contribution, are not subject to this cap.
How to Open an Account
Trump Accounts are established by an authorized individual (such as a parent or guardian) by filing IRS Form 4547 or through the federal portal at trumpaccounts.gov. Treasury pilot contributions are expected to be deposited no earlier than July 4, 2026. More guidance is expected as the program continues to roll out.
