Kickstart Your Child's Future with a Trump Account

The One Big Beautiful Bill Act (OBBBA) passed by Congress and signed by the President in July of 2025 included the creation of a brand-new type of child investment account called a Trump account. All children under age 18 with a valid Social Security number are eligible for Trump accounts. These accounts have been compared to Health Savings Accounts or 529 Education Savings Plans, but they most closely resemble Individual Retirement Accounts (IRAs). Contributions to the plan can be made by parents, grandparents, friends, employers, philanthropists, and even the US Treasury. Contributed funds are invested in low-cost index funds in the name of the child. When the child turns 18, the account becomes an IRA.

Setting Up the Account

You can establish a Trump account for any eligible child by filing form 4547 with your 2025 tax return. The administration has also announced that an online portal for opening an account will go live by summer 2026. Once established, the account will be placed with a financial institution authorized by the US Treasury to act as Trustee. After initial funding, the funds in the account may be rolled over to a Trump Account at another financial institution. While the form to create an account can be filed now, the accounts cannot begin receiving contributions until after July 4th, 2026.

Contributions and Investment

Anyone can contribute to a Trump account. Each account has an annual contribution limit of $5,000 per year, which will be inflation adjusted after 2027. Contributions from family and friends are generally not tax deductible, but employers can set up Trump account contributions as part of an employer Section 125 "cafeteria plan" so parents may exclude contributions made through payroll withholding from taxable income. Employers may also make direct tax-deductible contributions to the accounts of their employees' children up to $2,500 per child.

There is still some uncertainty around reporting for contributions. As the law is currently written, contributions do not qualify for exemption from gift tax reporting. That means that contributors would be required to file form 709 US Gift Tax Return to report a transfer of a future interest. This was an unintended consequence of the tax law, and we expect additional guidance or future legislative action to resolve the situation.

The US Treasury sets the criteria for what investments may be held in a Trump account to ensure the accounts experience sustained long-term growth. According to the IRS, "The funds in Trump Accounts must be invested in certain mutual funds or exchange-traded funds that track the S&P 500 or another index of primarily American equities." Eligible investments are limited to those with an annual fee of less than 0.1%.

Taxability

While guidance is still expected, the consensus among professionals is that distributions from the accounts will be taxed similar to IRAs. The accounts will be tax-free until a distribution of funds occurs. After-tax contributions from parents, family, and friends will create basis in the account, and that portion of distributions will be tax-free. Deducted contributions from employers and account growth will be subject to income tax when distributed. No distributions are allowed before the year the child turns 18, and distributions before age 55 are subject to early withdrawal penalties if not used for qualifying events. Like IRAs, withdrawals for up to $10,000 down on a first-time home purchase, education expenses, and $5,000 for birth or adoption are qualifying events. Unlike IRAs, the current guidance also states that Trump Account funds can be withdrawn early to start a business.

Initial Funding

To further incentivize enrollment, the law also directed Treasury to put $1,000 of initial seed-money into the Trump Account for US citizens born in 2025, 2026, 2027, and 2028. Using historic average market returns, just that initial investment is projected to be worth over $200k by the time the beneficiary turns 55. There is no requirement to make any contributions after the account is opened.

In December of 2025, Michael and Susan Dell, the founders of Dell Computer, announced that they will contribute $6.25 billion to the Trump accounts of 25 million children. The only criteria that have been expressed are that the child must be age 10 or under, live in a zip code with a median income of less than $150,000, and have been born before January 1, 2025. So far, it is unclear if all children meeting the criteria will receive the contribution or if there will be additional hurdles to clear. The recipients will each receive $250 from the Dell contribution into their Trump accounts. A Connecticut-based organization, Dalio Philanthropies, has pledged to match the Dell contribution for 300,000 children in the state of Connecticut.

Other Corporate Action

So far, several large corporations have announced plans to supplement their employees' compensation with Trump account contributions. Many employers have pledged to match the US Treasury contribution for all children of their employees born 2025-2028. Those employers include Coinbase, Intel, Charles Schwab, SoFi, JPMorgan Chase, Robinhood, Chime, Steak 'n Shake, and several others. Many other well-known corporations have announced an intent to offer Trump account incentives to employees with details yet to be announced. With so many corporations committing to support future financial stability for the children of their employees, we expect many more to join as further guidance is issued.

Feature	Trump Account	Traditional / Roth IRA	529 Education Plan	Health Savings Account (HSA)
Who Can Have One	Children under 18 with SSN	Adults with earned income	Anyone	Individuals with high deductibility health plan
Who Can Contribute	Anyone	Individual (and spouse)	Anyone	Individual or employer
Annual Contribution Limit	$5,000 (indexed after 2027)	$7,000–$8,000 depending on age	Varies by state; often high	$4,150 individual / $8,300 family (2025)
Tax Deductibility	Employer contributions and employee payroll contributions deductible	Traditional IRA deductible; Roth not	No federal deduction; some state deductions	Contributions are tax-deductible
Investment Options	Limited to low-cost U.S. equity index funds (<0.1% fee)	Broad investment choice	State-approved investment menus	Broad investment choice
When Funds Can Be Withdrawn	No withdrawals before age 18 After 18, IRA rules apply	Anytime (penalties may apply)	Anytime (penalties may apply)	Anytime (penalties may apply)
Taxation of Growth	Tax-deferred; taxed like IRA at withdrawal	Traditional: taxed at withdrawal; Roth: tax-free	Tax-free if used for education	Tax-free if used for medical expenses
Qualifying Uses to Avoid Penalty	All IRA exemptions + starting a business	First-home purchase, education, birth/adoption, domestic abuse, certain health expenses	Education expenses	Medical expenses

What You Can Do Now

You don't have to wait until July to take action. You can file form 4547 now with your 2025 tax return to enroll your children in Trump accounts. Enrolling now ensures your children have the best chance of benefitting from the Dell family contribution. There are no fees to enroll, and there is no out-of-pocket expense for maintaining the account. If we have not already reached out to you about opening a Trump account for your child, call us at (816) 941-2900 or email jessica@fpgtax.com.