Trump Accounts are the One, Big, Beautiful Bill Act’s new tax-favored savings accounts for children — and they open for contributions on July 4, 2026. Every eligible newborn gets a one-time $1,000 deposit from the federal government, employers can add up to $2,500 a year tax-free, and the balance compounds in U.S. index funds until the child turns 18. Here is how the accounts actually work, based on IRS Notice 2025-68 and the proposed regulations.
What is a Trump Account?
A Trump Account (IRC section 530A) is a special kind of traditional IRA established for a child under 18. The account is owned by the child but managed by a “responsible party” — usually a parent or guardian — until age 18. Unlike a normal IRA, the child does not need any earned income: anyone can fund the account, up to the limits below.
While the child is under 18 (the “growth period”), the money is locked in: no withdrawals are allowed, and the funds must stay invested in eligible index funds.
The $1,000 pilot deposit
The headline feature is a one-time $1,000 pilot program contribution paid by the Treasury into the account. To qualify, the child must be:
- born between January 1, 2025 and December 31, 2028,
- a U.S. citizen, and
- the holder of a Social Security number issued before the election is made.
A parent or guardian claims the deposit by checking the election box on IRS Form 4547 or applying through the trumpaccounts.gov portal. Only one pilot election can ever be made per child. The IRS has reported that more than 4 million children were signed up in the first wave — but the money cannot actually land in accounts before the July 4, 2026 start date.
The pilot deposit does not count toward the annual contribution cap. For the full eligibility boundary cases — children born in 2024, kids turning 18 soon, babies due in 2027 or 2028 — see our eligibility guide.
Contribution rules: the $5,000 cap
Contributions from family members and employers combined are capped at $5,000 per year (indexed for inflation after 2027). Within that cap:
- Anyone can contribute — parents, grandparents, the child themselves. These contributions are after-tax and create basis, which comes back tax-free at withdrawal.
- Employers can contribute up to $2,500 per year under new IRC section 128, and that money is excluded from the employee’s income entirely. The catch: it counts against the same $5,000 combined cap, and it carries no basis. Details in our employer contribution guide.
- Governments and charities can make “qualified general contributions” to defined groups of children — for example, a state seeding every baby born in a given county. These sit entirely outside the $5,000 cap.
There is no income test and no earned-income requirement — a sharp contrast with normal IRA rules.
Where the money must be invested
During the growth period, Trump Account funds may only be invested in mutual funds or ETFs that track an index made up primarily of U.S. companies — think S&P 500 index funds. The fund cannot use leverage and cannot charge more than 0.1% in annual fees. Practically, that means low-cost passive equity growth for up to 18 years.
How withdrawals are taxed
Nothing can come out of the account before January 1 of the year the child turns 18. After that, the account follows traditional IRA rules:
- The family’s own contributions (the basis) come back tax-free.
- Everything else — investment earnings, the $1,000 pilot, employer and government contributions — is taxed as ordinary income when withdrawn.
- Withdrawals before age 59½ also face the 10% additional tax, unless an exception applies. The big ones for young adults: qualified higher education expenses and up to $10,000 for a first-home purchase.
That tax treatment is the key difference from a 529 plan, where qualified education withdrawals are entirely tax-free. We compare the two head-to-head in Trump Account vs 529.
How to open one (from July 4, 2026)
There is no bank to visit — the accounts are administered by the Treasury. You open one by making an election:
- File IRS Form 4547 — complete Parts I, II, and IV to open the account, and check the Part III box to claim the $1,000 pilot deposit for an eligible child. Our Form 4547 walkthrough covers it line by line.
- Or apply online at trumpaccounts.gov — the Treasury’s portal accepts the same election electronically.
Once the account exists, contributions can be made from July 4, 2026 onward — 2026 counts as a full contribution year.
What it adds up to
A child born in 2026 whose family contributes the full $5,000 a year at a 7% average return would have roughly $173,000 at age 18 — including the pilot deposit. Even just the $1,000 pilot left alone, with no further contributions, grows to around $3,200 by 18 at that return.
Run your own numbers — birth year, family and employer contributions, expected return, and the tax bill at withdrawal — with our Trump Account Calculator.