Trump Accounts: A New Tool for Building Optionality for Children
Trump Accounts (IRC §530A) are a newly created, tax‑advantaged savings framework designed specifically for children under age 18, established under the One Big Beautiful Bill Act of 2025. The strategy exists to help families begin long‑term retirement savings at birth, even when a child has no earned income, by providing a structured, phased system that transitions into a traditional IRA at adulthood.
Key Takeaways
Here are some important features, benefits, and pitfalls of Trump Accounts:
Early-start, tax-advantaged structure for children: Trump Accounts (IRC §530A) are a new savings vehicle for minors with a two-phase system designed to jumpstart long-term wealth building.
Powerful early compounding advantage: Starting at birth can potentially add 18 extra years of tax-advantaged growth, which can produce significant balances by early adulthood.
Flexible, multi-source contributions (no earned income required): Unlike IRAs, contributions can come from parents, relatives, employers, nonprofits, and government seed programs, expanding funding opportunities.
Government and employer incentives enhance value: Features like a $1,000 federal seed (for eligible birth years) and employer contributions up to $2,500 annually can materially boost outcomes without requiring direct family funding.
Strict guardrails promote long-term savings discipline: Accounts prohibit early withdrawals and limit investments to low-cost diversified index funds, ensuring funds are preserved for long-term use and reducing behavioral risk.
A possible trade-off is limited flexibility and constrained investment choices: During the growth period, only specific low-fee index funds are allowed, and withdrawals are heavily restricted — making the account less flexible than taxable accounts or trusts until age 18.
Complex tax treatment and planning considerations: Multiple contribution types have different tax and basis rules, earnings are generally tax-deferred (not tax-free), and contributions may trigger gift tax reporting, adding administrative complexity.
Not always the optimal primary vehicle: Compared with alternatives, Trump Accounts may be less tax-efficient than 529 plans for education or Roth IRAs for retirement, and benefits skew toward families able to contribute consistently or access employer/philanthropic funding.
To learn more about Trump Accounts, please refer to the summary of features and highlights. For a deeper look at this new savings vehicle, including expert insights, practical advice, and comparisons with other savings options for children, please enjoy our informative whitepaper.
How Do I Open a Trump Account?
Elections to establish a new Trump Account are made through a Treasury Department/IRS-designated process.
How it works:
Sign in or create an IRS account here: https://form.trumpaccounts.gov/.
Complete and submit Form 4547 to elect your child. (Note: You can also file Form 4547 with your current-year e-filed tax return.)
Check the status of your submitted election form(s) or look for an email confirming that your election to open your child’s Trump Account was processed and prompting you to complete account activation. (Note that the initial activation emails will come only from no-reply@TrumpAccounts.Treasury.gov.)
Follow the instructions in the email to activate the account through the Trump Accounts mobile app or by visiting TrumpAccounts.gov.
Accounts can currently be set up using the process outlined above. It is projected that contributions can be made after July 4, 2026. Look for updates on https://www.trumpaccounts.gov/.
Note: KeyBank is not a financial agent for Trump Accounts, and does not originate, facilitate, or service Trump Accounts. BNY is the designated financial agent for this program. At this time, it is unknown whether other financial services companies will be able to join the Trump Accounts program. There is no cost to open an account.