Families now have a new savings account to consider for their children thanks to the One Big Beautiful Bill Act (OBBBA). Described as an individual retirement account for minors, Trump Accounts, also known as 530A accounts, officially launched in July 2026. Here are the details of the new IRA-style accounts, the rules families should know about, and when and why it may be worth funding for wealthy families.
What is a Trump Account?
Created under the Working Families Tax Cuts of the OBBBA, Trump Accounts are a new account type for eligible children under 18. These tax-advantaged investment accounts are for U.S. citizens, with the account owned by the child but administered by an adult. A key advantage of Trump Accounts for newborns is a one-time $1,000 head start contribution from the government available for children born between Jan. 1, 2025, and Dec. 31, 2028.
How to open a Trump Account
Parents or guardians must open a Trump Account on behalf of each eligible child. Be sure to check that the child is eligible — a U.S. citizen with a Social Security number who has not turned 18 by Dec. 31 of the year the election is made — and whether they fall into the 2025-2028 window for the $1,000 seed contribution.
To complete the process, you need to make an election when you file your taxes using Form 4547. After that, a financial institution will receive any contributed funds and activate your child’s account. Another way to sign up is to download the Trump Account app on an iPhone or Android device and fill out Form 4547 via the app. You will need to verify your identity by answering questions on the app.
Investments
According to TrumpAccounts.gov, the funds are automatically invested in U.S. companies via certain mutual funds or ETFs tracking the S&P 500 or another index of primarily American companies, and you’ll be able to see which stocks your child owns and how they’re performing on the app.
At launch, the Treasury Department said Trump Account contributions will be invested in the State Street SPDR Portfolio S&P 500 ETF (SPYM), which is a low-cost exchange-traded fund (ETF) that tracks the performance of the S&P 500 Index. The Treasury also chose the following ETFs:
- iShares Core S&P 500 ETF (IVV)
- Vanguard Total Stock Market ETF (VTI)
- State Street SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM)
- iShares Core S&P total U.S. Stock Market ETF (ITOT)
Families will soon be able to allocate funds across other investment options, according to the Treasury Department.
Contributions
You can contribute up to $5,000 a year in aggregate. Starting after 2027, that maximum will adjust for inflation. Keep in mind, not every deposit counts toward the $5,000 annual limit. The one-time $1,000 government contribution, certain nonprofit or government-funded contributions, and qualified rollovers are excluded from the cap. Employer contributions and most other deposits, however, are included.
Employers can contribute to the Trump Account of an employee’s dependent up to $2,500 per year, which counts against the $5,000 annual limit. At launch, more than 50 companies like had pledged to contribute to employee Trump Accounts for kids. Chipotle, Comcast, Robinhood, and SoFi, for example, said they would match the government’s $1,000 seed contribution.
The $2,500 limit is per employee, not per dependent, so an employee with two dependents could contribute up to $1,250 each. This employer contribution is not taxable for the employee, and it is tax deductible for the company. Beware of overfunding, though, and be mindful of the $5,000 aggregate cap and employer amounts.
To contribute, the business needs to have an accountable plan in writing. Trump Accounts aren’t allowed to favor highly paid employees, but beyond that, they can be set up to include any group of employees, as long as it’s spelled out in the official plan document.
Friends, family members, certain government entities, and charities can also choose to contribute to Trump Accounts. There is some helpful gift tax relief for family members and other individual donors. The IRS and Treasury created a safe harbor that treats qualifying cash contributions to Trump Accounts as completed gifts eligible for the annual gift tax exclusion.
In simple terms, eligible donors generally will not need to file a gift tax return just because they contributed to a Trump Account, as long as their total gifts to that child stay within the annual exclusion amount. For 2026, that amount is $19,000 per beneficiary. It’s important to know that if you contribute over the annual exclusion amount, you will be required to file Form 709, United States (and Generation-Skipping Transfer) Gift Tax Return.
The U.S. Department of the Treasury has also announced it will accept “large philanthropic contributions of readily tradable public company stock to support Trump Accounts.” This means eligible donors can contribute approved publicly traded stock to the Treasury, and those assets will be deposited into Trump Accounts for qualifying children. The contributions will be handled according to the donor’s instructions and any applicable legal or Treasury rules.
Trump Account tax benefit and withdrawal rules
Contributions made to a Trump Account are tax-deferred, meaning taxes on the investment gains are postponed until a distribution is taken. However, it is important to note that tax-deferred does not mean tax-free. When distributions are made from the account, they may result in taxable income for the beneficiary.
Before making contributions, families should consult with their advisor regarding gift-tax reporting and talk about how Trump Account contributions fit within existing trusts and estate plans to ensure alignment with their overall financial strategy.
Because these accounts are intended for long-term savings, funds held in a Trump Account can’t be withdrawn before Jan. 1 of the year the beneficiary turns 18. Once the child hits this age threshold, the account is generally treated as a traditional IRA, and the same rules and regulations regarding distributions typically apply.
That means withdrawals taken before age 59½ will face a 10% penalty unless the funds are used for certain eligible expenses, including higher education, first-time home purchases (up to $10,000), birth or adoption expenses (up to $5,000), or qualifying disability or terminal illness costs. It also means required minimum distribution (RMD) rules will apply.
Why high-income families should consider Trump Accounts
Should a high-income family use this? The answer is yes, to take advantage of the $1,000 seed contribution. Wealthy families still qualify for the one-time contribution, as long as the child is born within the qualifying window. Plus, with no income restrictions, any family can start a Trump Account and contribute funds to it each year.
It makes sense to start a Trump Account for your newborn if you want an IRA-like structure for long-horizon investing and are comfortable with not withdrawing the funds until after your child turns 18.
Trump Accounts can be used alongside 529 plans, UGMA/UTMA, and custodial Roth IRAs to set up your child for a healthy start to adulthood. Since many families already max out 529 plans and prefer taxable brokerage accounts for flexibility, Trump Accounts can be an additional option for savings and can be part of your employer benefits.
If you’ve already used the more common financial savings vehicles, consider opening Trump Accounts to get the government contribution, take advantage of employer contributions if offered, then decide if further funding aligns with your tax and estate goals.
Reach out to our M&S Wealth Management team for help with your child savings and gifting strategies.
READ MORE: Trump Account vs. 529 Plan: A Guide for Wealthy Families