Trump Accounts As a Child’s Investment Strategy

Mikaela Steckelis | 08.05.26

Beginning July 4, 2026, parents and guardians of minor children may establish new individual retirement accounts for their children called Trump Accounts. This new tax-advantaged retirement savings vehicle is a starter IRA (Individual Retirement Account) for children, with different contribution limits, investment rules, and other requirements than a traditional IRA.

Who is eligible for a Trump Account?

A child is eligible for a Trump Account if they (1) are a United States citizen, (2) have a valid Social Security number, and (3) have not turned 18 before the end of the calendar year in which the account is established.

As of August 1, 2026, there are no plans to sunset Trump Accounts as an investment vehicle for minors.

How much can be contributed to the account?

The maximum contribution amount is $5,000 per year. Anyone, including the child, may contribute funds to the account. Employers may contribute up to $2,500 per year for an employee’s dependent child, and the contribution is excluded from the employee’s taxable income (that is, the contribution is not taxable to the employee).

Charities and government organizations may also make contributions to eligible children, with certain contributions not counting toward the $5,000 maximum contribution.

Parents whose children are (1) born between January 1, 2025, and December 31, 2028, (2) are U.S. citizens, and (3) have a valid Social Security number are eligible for an initial $1,000 contribution from the federal government, which also is not taxable. This contribution does not count towards the annual $5,000 contribution limit.

What happens when my child turns 18?

In the year the child turns 18, the account automatically turns into a traditional IRA.

When can my child access the funds in their account?

Before the child turns 18, withdrawals from the account are strictly prohibited. Upon the child turning 18, the child may access funds in their individual account. If the child withdraws funds from their account before turning 59½, they are subject to a 10% early-withdrawal penalty. The child may, however, use funds penalty-free for certain eligible expenses. Eligible expenses include payments for qualified higher education expenses or first-time home purchases.

How are withdrawals taxed?

The tax status of contributions depends on the contributor. Contributions made by individuals are made on an after-tax basis and contributions made by employers are other entities are made on a pre-tax basis.

For pre-tax contributions, withdrawals are taxed at the ordinary income tax rate. Withdrawals taken before the child turns 59½ may face a 10% penalty in addition to the ordinary tax rate. Eligible expenses, such as higher education, the purchase of a first home, or disability, are not subject to the 10% penalty.

How do I open a Trump Account for my child?

In order to open a Trump Account, the child’s parent or guardian must prepare a Form 4547. Parents or guardians have three options for submitting this form (1) on the Trump Accounts app, (2) when they file their annual income tax returns, or (3) through the secure Individual Online Accounts through the IRS. Upon receipt of all required information, the US Treasury will send instructions to activate the account.

How are accounts invested?

The accounts are required to be invested in mutual funds and exchange-traded funds (ETFs) that track an index that consists of primary U.S. companies and that have an expense ratio below 0.10 percent. This investment strategy is to encourage long-term market exposure. Right now, Trump Accounts are created and managed with the US Treasury Department. Eventually, parents and guardians should be able to transfer the account to a preferred brokerage account.

What is the difference between a Trump Account and an IRA?

If parents open a Trump Account for the purpose of their child’s retirement, they may wonder how these accounts differ. There are a few differences between a Trump Account and IRAs:

1. There are no earned income requirements, therefore a child does not need to work to receive contributions.
2. Since the contributions by individuals are made with after-tax income, those contributions are not deductible from the individual contributor’s annual income taxes. IRA contributions in contrast can be made on a pre-tax basis and are deductible from the contributor’s income taxes.
3. Trump Accounts do not affect the child’s ability to contribute to an IRA. A working Trump Account beneficiary could contribute to both a Trump Account and an IRA.

What is the difference between a Trump Account and 529 Account?

If parents open a Trump Account for the purpose of their child’s future education, they may wonder how these accounts differ. The biggest difference between a Trump Account and a 529 plan is the taxation of the distributions. Distributions from a 529 plan are 100% tax-free for qualified education expenses. Since Trump Accounts have both pre- and post-tax contributions, the child may be subject to taxes for educational expenses.

This is only a broad overview of general rules and new information is continuing to be released by the US Treasury Department. Parents and employers with questions should contact the author or call Boardman Clark at (608) 257-9521 to speak with one of our tax attorneys.