The financial landscape for American families has shifted in 2026 with the introduction of Trump Accounts, formally known as Section 530a accounts. Established under the One Big Beautiful Bill Act, these tax-advantaged investment vehicles are designed to help provide American child with a financial head start. By utilizing the power of long-term compounding, these accounts aim to build generational wealth that transitions with the child into adulthood.
Core features of Section 530a Accounts
Trump Accounts function as custodial-style investment accounts. While the child is the legal owner of the assets, a parent or guardian manages the account until the beneficiary reaches age 18.
• The federal seed contribution: A hallmark of the program is a one-time $1,000 deposit from the U.S. Treasury for citizens born between January 1, 2025, and December 31, 2028.
• Annual contribution limits: Families and third parties can contribute up to $5,000 per year. Notable for high-net-worth families, these accounts do not require the child to have earned income, unlike a custodial Roth IRA.
• Employer participation: Employers may contribute up to $2,500 annually toward an employee’s child's account. These contributions are typically excluded from the employee's taxable income but do count toward the $5,000 total annual limit.
• Investment restrictions: To ensure stability, funds must be placed in low-cost index funds or exchange-traded funds (ETFs) that track broad U.S. indices, such as the S&P 500.
Tax treatment and transition
During the "growth period" (before the child turns 18), the account enjoys tax-deferred growth. Individual contributions are made with after-tax dollars, meaning they are not tax-deductible. However, government and employer contributions are made on a pre-tax basis.
On December 31 of the year before the beneficiary turns 18, the Trump Account automatically converts into a traditional IRA. At this point, standard IRA rules apply regarding distributions, penalties, and taxability.
Frequently asked questions
Who is eligible to open a Trump Account? Any child under age 18 with a valid Social Security number is eligible. U.S. citizenship is specifically required to receive the $1,000 federal seed contribution.
When do these accounts become active? While families can begin the election process during the 2025 tax filing season, the first day for active funding and contributions is July 4, 2026.
How is an account established? Parents or guardians must file IRS Form 4547 (Trump Account Election) with their federal tax return or use the official online portal at TrumpAccounts.gov.
Can the funds be used for college? Unlike a 529 plan, Trump Accounts are not restricted to educational expenses. However, because they convert to traditional IRAs, early withdrawals for education after age 18 would be subject to ordinary income tax, though they may avoid the 10% penalty under certain IRA exceptions.
Can children born before 2025 have an account? Yes. Any child under 18 can have a Trump Account to benefit from tax-deferred growth and employer matching. They simply will not receive the initial $1,000 government seed money.
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