A new savings option for children
Families have many reasons to save for a child’s future, whether that means education, a first home, starting a business, or simply creating a stronger financial foundation. A new federal savings option, called a Trump Account, is designed to help children begin building long-term savings early in life.
Trump Accounts were created under the Working Families Tax Cuts and are a new type of individual retirement account (IRA) established for eligible children. According to the IRS, the account is for a child who has not turned 18 before the end of the calendar year in which the election is made and who has a valid Social Security number.
To learn more visit irs.gov/trumpaccounts
Because this is a new program, some details may continue to evolve. Families should use the IRS as the primary source for the latest information.
What is a Trump Account?
A Trump Account is a type of traditional IRA created for the benefit of a child. The child is the account owner, and an authorized adult helps establish and manage the account while the child is a minor. The IRS instructions for Form 4547 provide additional details about how the account is established and managed.
During the account’s growth period, which generally lasts until the end of the calendar year before the child turns 18, special rules apply. These include limits on investments, contribution rules, and restrictions on when money can be taken out. After that period, the account is generally treated like a traditional IRA.
Who are Trump Accounts for?
Trump Accounts are intended for eligible children under age 18. To open an initial Trump Account, the child generally must:
- Be under age 18 at the end of the year the election is made.
- Have a valid Social Security number.
- Not already have had a Trump Account election filed on their behalf.
The IRS also notes a one-time $1,000 pilot program contribution for certain eligible children. To qualify for that contribution, the child must be a U.S. citizen, have a Social Security number, and be born after December 31, 2024, and before January 1, 2029. For more information review IRS pilot contribution guidance.
How does the $1,000 pilot contribution work?
For eligible children, the U.S. Treasury may make a one-time $1,000 contribution to the child’s Trump Account. A parent or qualifying individual must make the election for the pilot contribution, and the child must also have a Trump Account established.
The IRS states that no pilot program contribution will be deposited before July 4, 2026.
Who can open a Trump Account for a child?
An authorized individual must make the election to open the account. If the election is only to open an initial Trump Account and not to request the $1,000 pilot contribution, the IRS lists the order of priority as legal guardian, parent, adult sibling, then grandparent.
If the election also includes a request for the $1,000 pilot contribution, the person making the election generally must anticipate that the child will be their qualifying child for that tax year.
How do families get started?
The IRS says families can get started by signing in to an IRS account with ID.me and submitting Form 4547, Trump Account Election(s). Families may also be able to view the status of previously submitted Trump Account election forms through the IRS.
Form 4547 is used to make the election to establish an initial Trump Account and, when applicable, to request the $1,000 pilot program contribution.
How much can be contributed?
According to IRS guidance, contributions cannot be made to Trump Accounts before July 4, 2026. After that, contributions may come from several sources, including parents, the child, other individuals, eligible employer programs, certain government entities, and qualifying charitable organizations.
The IRS has stated that other persons may contribute up to an aggregate limit of $5,000 per year, while employers may contribute up to $2,500 per year under an employer Trump Account contribution program. Employer contributions count toward the $5,000 annual limit, and contribution limits are indexed to inflation after 2027.
How are the funds invested?
During the growth period, Trump Accounts must be invested in eligible investments. The IRS generally describes these as certain mutual funds or exchange-traded funds that track an index of primarily U.S. companies and meet other requirements.
As with any investment account, families should understand that investment values can change over time. A Trump Account is designed as a long-term savings tool, not a traditional savings account.
When can the money be used?
In general, money cannot be withdrawn from a Trump Account during the growth period except in limited situations, such as qualified rollovers, certain ABLE account rollovers at age 17, excess contribution distributions, or distributions upon the account beneficiary’s death.
After the growth period ends, most traditional IRA rules generally apply. That means withdrawals may be taxable and could be subject to an additional 10% early distribution tax unless an exception applies, such as certain higher education expenses or first-time home purchases.
What should families consider?
Trump Accounts may be one way to help a child begin building long-term savings, but they are not the only option. Families may also want to compare them with other savings tools, such as youth savings accounts, education savings options, or other investment accounts.
Before making a decision, it may help to consider:
- The child’s age and eligibility.
- Whether the child may qualify for the $1,000 pilot contribution.
- How long the funds may remain invested.
- Potential taxes or penalties on future withdrawals.
- How this account fits with the family’s broader financial goals.
Where to learn more
Because Trump Accounts are new and IRS guidance may continue to be updated, families should rely on official sources for the most current details. Visit the IRS Trump Accounts page or review Form 4547 and its instructions for more information.
Blue is here to help families build financial confidence
Looking for more ways to help your child build a strong financial foundation? Blue University’s Raising Money Smart Kids course offers practical tools and conversation starters to help families teach healthy money habits early, from saving and spending to setting goals for the future.
Every family’s financial journey looks different, and Blue is here to be a trusted resource along the way. Whether you are exploring new savings options, planning for your child’s future, or looking for clear next steps, we can help you understand the basics and connect you with reliable information. For official Trump Account guidance, please visit the IRS or consult a qualified tax professional.
Important note: This article is for educational purposes only and is not tax, legal, or investment advice. Please consult a qualified tax, legal, or financial professional for guidance based on your individual situation.