Understanding “Trump Accounts” for Children

What Families Need to Know

Many families have recently asked us about the new federal Trump Account program for their children and grandchildren. While the headlines focus on a $1,000 government contribution, it’s important to understand how these accounts work, who qualifies, and how they fit into a broader family wealth strategy.

Below is an overview of what we know today and what families should keep in mind.

 What Is a Trump Account?

A Trump Account is a new, tax-deferred investment account created under the One Big Beautiful Bill Act of 2025. It is designed to help children begin building long-term savings early in life.

For eligible children, the federal government will make a one-time $1,000 contribution to the account once it is properly established.

Who Is Eligible for the $1,000 Government Contribution?

• To qualify for the federal $1,000 seed contribution, a child must:
• Be a U.S. citizen
•  Have a valid Social Security number
• Be born between January 1, 2025, and December 31, 2028
• Have a Trump Account properly elected and established

This does not happen automatically. There is currently no automatic enrollment system, meaning families must take action or risk missing the benefit entirely.

How and When Accounts Are Established

Parents or legal guardians must establish a Trump Account by completing a new IRS election:

• IRS Form 4547 (draft released; final version pending), or
• Through an online IRS/Treasury portal that’s expected to be available in mid-2026

Families will be able to make this election when filing their 2025 tax return in 2026.

Key timing:

• Contributions to Trump Accounts cannot be made before July 4, 2026
• The $1,000 federal contribution applies only to children born 2025–2028
• Accounts may be opened for older children, but without the $1,000 federal seed

Investment Rules Inside a Trump Account

Trump Accounts are limited in how funds may be invested:

• Assets must be invested in broad U.S. equity index funds (e.g., S&P 500–type funds)
• Maximum allowable annual fund fees: 0.10%
• No alternative investments (no crypto, gold, individual stocks, CDs, or bonds)

At a later date, families may be able to roll the account to a private brokerage through a trustee-to-trustee transfer.

Contributions and Limits

• Annual contribution limit: $5,000 per child (indexed for inflation after 2027)
• The $1,000 federal contribution does not count toward this limit
• Parents, grandparents, other family members, friends, and employers may contribute
• Certain charitable organizations and government entities may contribute outside the annual limit

Funds generally cannot be withdrawn until the child turns 18.

Gift Tax Considerations for Family Contributions

While the $1,000 federal seed contribution does not create any gift tax implications, contributions made by parents, grandparents, or others are treated differently under current tax rules.

Considerations:

• Contributions made by individuals other than the federal government are generally considered taxable gifts
• Trump Account contributions do not currently qualify for the annual gift tax exclusion (which is $19,000 per recipient in 2025)
• Contributions from family members may require the filing of IRS Form 709 (U.S. Gift Tax Return)
• Filing a gift tax return does not necessarily mean gift tax is owed — most families apply the gift against their lifetime estate and gift tax exemption

Because this is a new program, additional IRS guidance may clarify or modify the treatment of these contributions. For now, families considering ongoing or larger contributions should coordinate with their wealth advisor or tax professional to ensure proper reporting.

Additional $250 Contributions for Some Families

Separate from the federal $1,000 contribution, an additional $250 contribution may be available for some children through a charitable commitment from Michael and Susan Dell.

Key points:

• Applies to children age 10 and under
• Based on ZIP code median income (under $150,000)
• Covers a large majority of U.S. ZIP codes
• Priority given to children born 2016–2024
• Additional eligibility details are expected in early 2026

This contribution is not automatic and still requires the child to have a Trump Account established.

How Trump Accounts Compare to Other Savings Vehicles

Trump Accounts can be useful, but they are not a replacement for other planning tools.

Depending on goals, families may also consider:

• 529 plans for education-specific savings
• Custodial accounts (UTMA/UGMA) for broader flexibility
• High-yield savings accounts or CDs for shorter-term needs
• Family gifting strategies aligned with estate planning goals

For some families, especially higher-net-worth households, it may make sense to accept the $1,000 federal contribution and then prioritize other vehicles for ongoing savings.

Important Considerations for Families

• Paperwork – Without filing the election, no account and no federal contribution will be created.
• Participation may be uneven. Research suggests that opt-in programs often see lower enrollment, particularly among families juggling competing demands.
• Details may evolve. This is a new program, and additional guidance is expected from the IRS and Treasury.
• Strategy is also key. The right mix of savings vehicles depends on each family’s tax situation, time horizon, and long-term goals.

Bottom Line

Trump Accounts offer a meaningful but limited opportunity to jump-start long-term savings for children. The value is not just the initial $1,000 but also the potential for disciplined, long-term growth when thoughtfully coordinated with a broader wealth strategy.

As always, we encourage families to view this opportunity as one component of a comprehensive planning approach rather than a standalone solution.

For official updates and forms, visit:  www.trumpaccounts.gov

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