Trump Accounts Are Open: What Parents and Grandparents Need to Know

A new savings vehicle for children is now live. Trump Accounts — created by the tax law enacted on July 4, 2025 (which the IRS refers to as the Working Families Tax Cuts) — became eligible for funding on July 4, 2026. For families with young children, the headline is a one-time $1,000 federal contribution for each eligible child. Here is what the IRS guidance says so far, and what's still being finalized.

What is a Trump Account?

According to the IRS, a Trump Account is a new type of traditional individual retirement account (IRA) for eligible minors. Unlike a regular IRA, the child doesn't need earned income, and the account operates under its own rules until the child reaches adulthood. Money in the account generally cannot be withdrawn before the year the child turns 18; after that, the account is treated like a traditional IRA with similar tax rules.

If you're familiar with how traditional IRAs are taxed — contributions now, ordinary income tax on withdrawals later — the long-term framework will look familiar. We cover that tax treatment in more depth in our post on when Roth conversions make sense.

Who qualifies for the $1,000 federal contribution?

Under the IRS proposed regulations, the one-time $1,000 pilot program contribution is available for a child who:

• Was born in 2025, 2026, 2027, or 2028
• Is a United States citizen
• Has been issued a Social Security number
• Has had no prior pilot program election made and processed on their behalf

The contribution isn't automatic. A parent, guardian, or other individual who expects the child to be their qualifying child for the year must make an election — typically using new IRS Form 4547 — and must also elect to establish a Trump Account for the child.

How do you open one and how much can go in?

Elections are made on Form 4547, and the government maintains an information portal at TrumpAccounts.gov. Per the IRS overview:

• Contributions from individuals and employers combined are allowed up to $5,000 per year per child
• Within that limit, employers may contribute up to $2,500 per year toward an employee's or dependent's account — generally deductible by the employer and excluded from the employee's taxable income
• Accounts could not be funded before July 4, 2026

A note worth highlighting: The regulations are still proposed, not final. Several practical details may be refined before the rules are locked in, so treat current guidance as a framework rather than the last word.

How is the money invested?

By law, Trump Account funds must be invested in certain mutual funds or exchange-traded funds that track a U.S. stock index, such as the S&P 500. That is a statutory design feature of the account, not an investment recommendation — it simply means families won't be picking individual securities inside these accounts.

Should your family open one?

For a child born between 2025 and 2028, the $1,000 federal contribution requires only an election — that part of the decision is straightforward for most eligible families. Whether to contribute beyond that is a different question. A Trump Account sits alongside other options — 529 plans, custodial accounts, and (for teens with earned income) IRAs, whose contribution limits we've covered before — and the right mix depends on your family's goals, tax situation, time horizon, and what the money is ultimately for. The same law also changed other planning items we've written about, including the new senior deduction.

The bottom line

Trump Accounts are live, the $1,000 pilot contribution is real but requires an election, and annual contributions are capped at $5,000. The rules are still in proposed form, so expect refinements. If you're weighing where a Trump Account fits among your family's savings priorities, that answer depends on your specifics — income, existing accounts, and goals for the child — and is worth thinking through before committing ongoing contributions.