The world of tax-advantaged accounts will grow in 2026 with the launch of President Donald Trump’s “Trump Accounts”: tax-advantaged savings accounts designed specifically with children in mind.
If you have a newborn at home, or you plan to have a baby within the next few years, you could enjoy a kickstart of $1,000, courtesy of the Treasury. But because that one-time grant doesn’t apply to most children, and because it might not be awarded after a few years, the math behind Trump Accounts looks a lot murkier for many current and would-be parents.
Should you embrace these investment plans for minors and start building their nest eggs with a Trump Account? We’ll explore everything you need to know, including eligibility requirements, how these accounts operate, their advantages, their drawbacks, and whether it makes sense to open one.
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What Is a Trump Account?
A Trump account (also known as the more politically neutral 530A account) is a tax-deferred account where savings can grow on a tax-free basis on behalf of a child.
Funds generally can’t be withdrawn until the child reaches age 18, with only a few exceptions. Once the child reaches age 18, standard IRA rules for withdrawals will apply—and those rules include carve-outs for larger pre-retirement expenses such as paying for an education or purchasing a first home.
These accounts also allow for a temporary one-time $1,000 grant for children born between 2025 and 2028.
Who Is Eligible for Trump Accounts?
Trump Accounts are designed for children under age 18. Parents are expected to be able to open 530A accounts starting in early to mid-2026, then contribute starting July 4, 2026.
For an account to be eligible for the one-time $1,000 grant from the government, the child must have been born between Jan. 1, 2025, and Dec. 31, 2028. The child must also be a U.S. citizen with a Social Security number.
How Do Trump Accounts Work?
While Trump Accounts are extremely similar to IRAs (and indeed act just like IRAs once a child becomes age 18), they have certain rules that don’t apply to comparable accounts.
The opening of a 530A account kicks off a “growth period” that lasts until Jan. 1 of the calendar year in which the account beneficiary turns 18. For instance, a child born Nov. 5, 2025, would turn 18 on Nov. 5, 2043; thus, the last day of the growth period would be Dec. 31, 2042.
Five types of contributions can be made during this period:
- The pilot program contribution of $1,000 from the U.S. Treasury
- Contributions from other sources, such as parents, the beneficiary, or others
- Qualified general contributions (by states or political subdivisions), the U.S., D.C., and more.
- Qualified rollover contributions
- Employer contributions, which aren’t includable in the gross income of the employee (limited to $2,500; subject to cost-of-living adjustments after 2027)
There is no annual contribution limit for pilot program contributions, qualified general contributions, or qualified rollover contributions. But combined employer and “other sources” contributions are capped at $5,000 annually, with that number subject to cost-of-living adjustments after 2027. Trustees must collect and report the amount and source of all contributions.
And importantly, no one can make any type of contribution to these accounts until July 4, 2026.
Also during this growth period, the following special rules apply:
- Contributions are made on a post-tax basis; thus, they are not deductible.
- Trump Accounts’ contribution limit is separate from other IRAs.
- Funds in the account can be invested solely in eligible investments (generally mutual funds and exchange-traded funds that track an index of primarily U.S. companies).
- The account generally is not allowed to make distributions (exceptions apply).
- Account trustees have similar, but different, reporting requirements from trustees of other IRAs.
While 530A accounts generally don’t allow withdrawals until Jan. 1 of the calendar year in which the child turns 18 years old, as mentioned before, there are a few exceptions: 1.) qualified rollover contributions, 2.) qualified ABLE rollover contributions, 3.) distributions of excess contributions, and 4.) distributions upon death of the account beneficiary.
Once the growth period ends, most of these special rules no longer apply. Instead, the accounts effectively become traditional IRAs and operate under those rules—including IRA contribution limits, allowable investments, and the 10% penalty for early withdrawals.
Related: How to Make Money as a Kid [25 Ways For Any Age]
Benefits of Trump Accounts
The most noteworthy benefit of the 530A account is the free $1,000 if you have a qualifying newborn between 2025 and 2028.
Also helpful is that, if you can convince your employer to contribute to the account, those contributions wouldn’t count as part of your income.
Unlike IRAs, which require the account owner to have includible compensation (basically workers can’t contribute more to an IRA than they earned that year), Trump Accounts don’t require the beneficiary to have includible compensation.
I’d add that opening one of these accounts could be the start of a healthy habit of investing for your kids … but in truth, you can get that same benefit by opening virtually any other type of account, whether that’s a 529 college fund or a custodial brokerage account.
Related: 5 Best Paid Surveys for Kids and Teens [Online Surveys]
Downsides to Trump Accounts
Unfortunately, Trump Accounts come up short compared to most other tax-advantaged accounts.
530A accounts start out more similarly to Roth IRAs—most contributions are after-tax, but contributions can grow tax-free in the account. But they’re far more restrictive. Funds can’t be accessed until age 18. Once the child does reach age 18, the account instead resembles a traditional IRA in that, yes, you can withdraw tax- and penalty-free, but generally only under traditional IRA exceptions (some educational costs, first-time home purchase, withdrawals after age 59 ½).
Parents looking to save for their children’s education will enjoy much better flexibility and tax benefits through a 529 plan. While custodial brokerage accounts will be more complex from a tax perspective, there are benefits—account income is considered the child’s and thus generally taxed at a much lower rate—and they’re far more flexible than standard retirement accounts.
And if you did plan on investing in retirement accounts for your child while acknowledging the possibility they might make withdrawals that fall under IRA exceptions, Roth IRAs would generally be more advantageous than 530A accounts. (So too would traditional IRAs, but for kids, Roth IRAs are generally more beneficial from a tax perspective.)
On top of all this, investment choices are much more limited than you’d find in an IRA or custodial brokerage account. That’s a wash with 529s, though, which also tend to have minimal investment options.
Lastly, some important details have yet to be revealed—most notably, which financial institutions will serve as initial trustees of the Trump Accounts. (Said differently: They haven’t announced which brokers and/or banks will be able to oversee these accounts.)
Related: 10 Financial Gifts for Babies, Kids & Grandkids [No More Toys]
Should You Open a Trump Account for Your Kid?
If you have a newborn, you should absolutely open a Trump Account—the free $1,000 alone makes it worth it. With no other investments, that $1,000, given 30 years at a 7% average annual growth rate, would balloon to $8,117.
If you managed to get your employer to contribute up to the $2,500 limit for just the first year, for a $3,500 balance, that same 30 years/7% would add up to $28,408.
Past that, though, Trump Accounts fall flat.
“Trump Accounts do not offer much of an additional incentive to save,” says the Tax Foundation, a nonpartisan think tank. “Rather, the main benefit is in the form of the $1,000 initial deposit from the federal government and whatever employers choose to contribute (perhaps Trump Accounts might encourage young beneficiaries to engage in more money management than the otherwise would if not saving per se).”
A 529 account, Education Savings Account (ESA), or custodial account are all great options. If your child earns income, a Roth IRA is an excellent investment tool.
Related: How Much to Save for Your Kid’s College [3 Tax-Smart Options]
How Do I Open a Trump Account for My Child?
Authorized individuals can establish a Trump account by making the election on IRS Form 4547, Trump Account Election(s). Alternatively, you can use an online tool or application on trumpaccounts.gov (application not yet live, but you can sign up for email updates).
The account may be established at the same time an election is made to get a pilot program contribution, or at any other time before Jan. 1 of the calendar year in which the beneficiary attains the age of 18.
Related: 10 Best Banking Apps for Kids & Teens [Kid + Teen Banking]
