What are Trump Accounts?
The IRS has released its first round of guidance on Trump accounts for children, a new long-term savings program created under H.R. 1, P.L. 119-21—commonly known as the One Big Beautiful Bill Act (OBBBA). Designed to help children build investment savings early in life, these government-sponsored accounts include a $1,000 federal seed contribution, optional family deposits, and potential contributions from employers or nonprofit organizations. While the program will not launch until 2026, the IRS’s early guidance offers important insight for families and financial planners preparing ahead.
The agency’s preliminary information appears in Notice 2025-68, which outlines broad rules for account creation, contributions, eligible investments, and how these accounts will eventually transition into IRA-like vehicles. The IRS emphasized that this guidance is only an overview, and that many key details are still being finalized. To support the implementation process, the IRS has released a draft of Form 4547, Trump Account Election(s), the form families will use to establish accounts and enroll in the $1,000 pilot program once available.
Alongside this release, the IRS opened a public comment period running through Feb. 20, 2026, inviting feedback from parents, financial professionals, employers, and advocacy groups before issuing final regulations.
Key Features of the Trump Account Program
Eligibility Requirements for Trump Accounts
A Trump account may be established for any child under 18 who has a valid Social Security number. An authorized adult (typically a parent or guardian, though an adult sibling or grandparent may also serve) must complete the election to open the account.
Launch Timeline
The program is scheduled to become available in mid-2026, with contributions beginning after July 4, 2026.
Parents of children born between Jan. 1, 2025, and Dec. 31, 2028 may elect to open an account once Form 4547 or the online enrollment portal at TrumpAccounts.gov becomes available. After enrollment, Treasury will activate the account.
Federal $1,000 Pilot Program Contribution
Under Sec. 6434, the Treasury will deposit a one-time $1,000 contribution for each eligible child for whom an election is made. This federal deposit is automatic once the account is established.
Additional Contributions
Families may contribute up to $5,000 per year into the child’s Trump account. Governments and nonprofits can also make eligible contributions.
Employers may contribute up to $2,500 per year to an employee’s Trump account or that of their dependent, an amount excluded from the employee’s taxable income under Sec. 128. Starting in 2027, limits will be indexed for inflation.
In addition, rollovers from another Trump account are permitted, and these transfers do not count toward annual contribution limits.
Planning Insight: Families with higher incomes or long-term investment goals may want to evaluate how Trump accounts fit alongside 529 plans, trusts, and retirement strategies.
How Trump Accounts Grow
The Trump account program is intentionally designed to keep investments simple, low-cost, diversified, and focused on long-term growth. The IRS limits eligible investments to broad U.S. stock market index funds, similar to those used in many retirement plans. Families cannot choose individual stocks, sector-specific funds, or narrow thematic investments.
This approach aims to promote stable growth through long-term compounding: as companies in the broader U.S. market grow, so does the account’s value.
Families considering Trump accounts should consult with a CPA to understand how these new rules interact with existing tax and investment strategies.
Withdrawal Rules and Adult Transition
Before Age 18
Funds generally cannot be withdrawn during what the IRS calls the “growth period” from account creation until Jan. 1 of the year the child turns 18. Hardship withdrawals are not permitted, except for four narrowly defined exceptions, which the IRS has not yet fully detailed but intends to keep limited to preserve long-term investing.
After Age 18
Once the child turns 18, the account begins operating much like a traditional IRA, with similar distribution rules and tax treatment. However, the Trump account never fully merges into a standard IRA. It retains distinct legal characteristics, meaning that:
- Trump accounts maintain unique reporting requirements,
- They have their own contribution rules and limitations, and
- They must be managed alongside any other retirement accounts throughout the beneficiary’s lifetime.
Conclusion and What Families Should Do Now
The Trump account program represents a significant new federal initiative designed to give children a long-term financial head start through structured investing and government support. While early IRS guidance outlines eligibility, contributions, and investment rules, many regulatory details remain under development. As the program moves toward its 2026 launch, families, employers, and financial advisors should stay informed and consider how these accounts may complement broader tax and wealth planning strategies.
