Starting in 2026, families will have access to a brand-new savings tool for children called Trump Accounts, created under the One Big Beautiful Bill Act (OBBBA). These accounts are designed to encourage long-term investing for kids, with tax deferred growth, strict guardrails, and even a limited government funded jumpstart for certain children.

 

What Exactly Is a Trump Account?

 

A Trump Account is a tax deferred investment account for children under age 18, effective for tax years beginning after December 31, 2025. Legally, it is structured as a special type of individual retirement account, but with customized rules that apply only to minors.

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The big idea is simple: invest early, leave the money alone, and let time do the heavy lifting.

 

Who Can Have One?

 

Eligibility is straightforward, but precise. The child must be under age 18 at the end of the year the account is established and must have a Social Security number issued before the account election is made.

 

To qualify for the $1,000 government contribution, the child must be a U.S. citizen born between January 1, 2025, and December 31, 2028. Only one Trump Account election is allowed per child.

 

How Enrollment Works

 

Trump Accounts are not automatic. They require an affirmative election, made by a parent, guardian, or other authorized individual.

 

For 2026, that election will be made using new IRS Form 4547, Trump Account Election(s), or through an IRS managed online portal expected to launch in mid-2026. The election includes identifying information for both the adult and the child, and it is also where eligible families elect into the government pilot contribution. If you miss the enrollment window, there currently isn’t any way to retroactively enroll.

 

Contribution Rules: How Much Can Go In?

 

The annual contribution cap is $5,000 per child, indexed for inflation starting in 2027. Contributions can come from parents, relatives, the child, employers, or other qualified sources.

 

Employer contributions are allowed, up to $2,500 per year per child, but they count toward the overall $5,000 limit. Contributions are not tax deductible, regardless of who makes them.

 

Some contributions do not count toward the annual limit at all. Government pilot contributions and certain qualified general contributions, such as those from government or charitable organizations, sit outside the $5,000 cap.

 

One warning worth taking seriously: excess contributions must be withdrawn, and any earnings tied to those excess amounts are hit with a 100% tax penalty.

 

How the Money Must Be Invested

 

Trump Accounts are intentionally restrictive when it comes to investments. Funds must be placed in mutual funds or ETFs that track the S&P 500 or another broad index of primarily U.S. companies.

 

No leverage is allowed, meaning no borrowed money. Annual fees and expenses cannot exceed 0.1 percent of the account balance, and the investment must meet any additional criteria set by the Treasury Secretary.

 

The account trustee, not the parent, is responsible for ensuring these rules are followed.

 

Withdrawals: When Can the Money Be Used?

 

This is where Trump Accounts really show their long-term intent. No withdrawals are allowed before age 18, with one narrow exception. At age 17, funds may be rolled over to an ABLE account for individuals with disabilities.

 

Tax Treatment

 

The tax structure is simple but important. Earnings grow tax deferred while funds remain in the account. Distributions after age 18 are taxed as ordinary income. After age 18, the account is treated as a traditional IRA for tax purposes: distributions are taxable as ordinary income. Early withdrawals before age 59½ are subject to a 10% penalty, with exceptions for higher education, disability, domestic abuse, natural disaster, first-time home purchase (up to $10,000), or birth/adoption (up to $5,000).

 

The initial government contribution and certain qualified general contributions are excluded from the beneficiary’s gross income, which helps preserve the value of those early dollars.

 

Special Situations to Know About

 

If a child passes away before age 18, the account stops being a Trump Account, and the funds are included in the gross income of the recipient, such as the estate or inheritor.

 

Trustees are also required to report contributions, distributions, account values, and other required information to the IRS and the beneficiary, with additional reporting rules applying while the child is still a minor.

 

How Trump Accounts Compare to Other Savings Options

 

Trump Accounts are often mentioned alongside 529 plans and Roth IRAs, but they work very differently.

 

A 529 plan allows tax free withdrawals for qualified education expenses. Trump Accounts do not. Roth IRAs allow tax free qualified withdrawals, but contributions to Roth IRAs require earned income and these accounts are not designed specifically for minors without jobs.

 

Trump Accounts sit in their own lane: tax deferred growth now, taxable income later, with strict limits on access along the way.

 

Additional Funding and Private Support

 

The program has attracted significant private funding, including $6.25 billion from Michael and Susan Dell. These donations may result in additional contributions, such as $250 per account, for eligible children, although details depend on program implementation.

 

Trump Accounts introduce a new, government backed way to invest for children, built for patience rather than flexibility. For families with children born between 2025 and 2028, the potential government contribution makes early action especially important.

 

These accounts reward long-term thinking, careful compliance, and disciplined investing. They also come with rigid rules and real penalties for missteps. As with any new program, understanding the details before making the election will matter just as much as starting early.