Overview · 3 min read
Trump accounts
Trump accounts are a new type of IRA for children, created by the 2025 tax law. Families, employers and others can contribute, and the money is invested in low-cost US stock index funds until the child turns 18. After that, the account works much like a traditional IRA.
- Who it fits
- Parents of children under 18, especially those born 2025 to 2028.
- Figures
- 2026 tax year
The key rule
Children who are US citizens born from 2025 through 2028 can receive a one-time $1,000 federal deposit. Family contributions are capped at $5,000 a year, and employers can add up to $2,500 a year tax-free.
How it works
- Contributions from family are not deductible, but grow tax-deferred.
- Withdrawals are generally not allowed before the year the child turns 18.
- Investments are limited to low-cost funds that track US stock indexes.
- Employer contributions do not count as the employee's income, up to $2,500.
5 steps
Make the election
Elect to open the account on IRS Form 4547, either with your tax return or through the online process.
Claim the $1,000 deposit if eligible
Children born 2025 through 2028 with a Social Security number qualify.
Add contributions
Contributions could begin in July 2026.
Ask your employer
Some employers offer contributions as a benefit.
Compare with a 529 and a Roth IRA
For college savings, a 529 is usually better. For a child with earned income, a Roth IRA usually comes first.
Example
A child born in 2026
Your daughter is born in 2026. You elect a Trump account on Form 4547 with your return, she receives the $1,000 federal deposit, and your employer adds $1,000 a year. With $2,000 a year of family contributions until 18, the account could grow to roughly $100,000 at 7% a year.
Common mistakes
- Rules are new and guidance is still arriving. We will update this guide as it does.
- Choosing this over a 529 for college savings. A 529 gives tax-free withdrawals for education; this account does not.
Key dates
- July 2026
- Contributions first allowed.
- Year the child turns 18
- Withdrawals become possible, under IRA rules.
Questions we hear
Are withdrawals tax-free?
No. Growth is tax-deferred, and withdrawals are generally taxed like a traditional IRA, with your family contributions coming back tax-free.
Is there an income limit?
No income limit applies to the parents for opening the account or contributing.
What to send us
- Your child’s Social Security number
- Any confirmation of the account
Upload them to your client portal.
General education for TaxSquad clients, not advice for your situation. Rules and figures change. Talk to us before acting on this guide.