A new account with a lot of buzz
This summer we opened Trump Accounts for both of our kids. My son was born inside the window for the $1,000 Treasury deposit, and my daughter wasn’t, but the account itself is open to her too.
There’s been plenty of noise about these accounts (and plenty of confusion), so here’s the plain-English version of what they are, how they work, and how we’re thinking about them at home.
How it works
Think of it as a retirement account with a kid’s name on it.
- Who can have one: Any child under 18 with a Social Security number.
- The seed money: U.S. citizen kids born from 2025 through 2028 get a one-time $1,000 deposit from the Treasury. You have to ask for it when you open the account (more on that below).
- Contributions: Family can put in up to $5,000 a year. An employer can chip in up to $2,500 of that, tax-free to you. Gifts from government programs or charities don’t count against the $5,000. Contributions opened July 4, 2026, and they stop in the year your child turns 18.
- Investments: Low-cost U.S. stock index funds, with fees capped at 0.10%. No picking hot stocks, which is probably for the best.
- Access: The money stays put until the year your child turns 18. After that, the account follows IRA rules.
The feature I find most interesting is that you can fund it for a kid with no earned income. You can’t do that with a Roth IRA, so this is a way to start a child’s retirement savings years (or decades) earlier than you otherwise could.
How the money gets taxed
What you put in yourself goes in after tax, so it comes back out tax-free. Everything else (the growth, the $1,000 seed, any employer money) is taxed as ordinary income to your child when it comes out. Pull it before 59½ and there’s generally a 10% penalty on top of that, with the usual IRA exceptions, like qualified college costs or a first home.
Here’s how we’re using ours. We plan to keep contributing until each kid turns 18. After that, the account becomes an IRA, and in their early twenties, when their income (and their tax bracket) is likely as low as it’ll ever be, we’ll look at converting it to a Roth. They’d pay some tax on the conversion then, and potentially nothing on decades of growth after that. (Yes, I’m planning my kids’ retirement before either of them can say the word.)
What about college? A lot of parents ask whether a Trump Account can double as a college fund. It can, but the taxes and the financial aid formula make it a lot less attractive than it looks. I walk through the numbers in Trump Accounts vs. 529s: Which One Pays for College? [LINK TO COLLEGE ARTICLE]
How to open one
You open the account by filing IRS Form 4547, either with your tax return or online at trumpaccounts.gov. If your child qualifies for the $1,000, check the box on the form asking for it; if you don’t, the deposit won’t come. After the election goes through, Treasury sends instructions to activate the account, and the parent who filed becomes the account’s “responsible party” until the child turns 18.
These accounts are brand new, and the details will keep getting filled in. How one fits alongside everything else you’re saving for depends on your income, your goals, and your tax picture, and that’s where we can actually help. You know where to find me.
Sources
• Eligibility, seed money, limits, taxation of withdrawals: Center for Retirement Research at Boston College, “Trump Accounts: A Primer for Parents”
• Launch date, investment rules, fee cap, IRA rules at 18, Roth conversion, penalty exceptions: Charles Schwab, “What to Know About Trump Accounts”
• Opening the account, Form 4547, claiming the $1,000, activation: Saving for College, “How to Open a Trump Account with IRS Form 4547”
• IRS Form 4547, Trump Account Election(s)