As a parent, you might be looking for ways to provide for your children’s long-term financial goals. You may have heard of 529 accounts to help save for higher education or brokerage accounts (including UTMA & UGMA custodial accounts), but there’s a new option available starting this year: Section 530A accounts, also known as Trump Accounts.
Established under the One Big Beautiful Bill Act, these accounts are designed to help facilitate early-stage wealth accumulation.
What is a Trump Account & Who Can Apply?
A Trump Account is a specialized, tax-deferred investment account for minors. It functions similarly to a traditional IRA but is tailored for children under 18 and doesn’t require earned income in order to make contributions. All U.S. children born before January 1, 2025, who are under the age of 18 are eligible for a Trump Account.
Families, friends, and employers can contribute a total of $5,000 per year (indexed for inflation), and the funds are held in the child’s name and managed by a guardian until the child turns 18. Deposits in Trump Accounts are required to be allocated to stock mutual funds or exchange-traded funds mirroring the S&P 500 or another American stock index. Deposits cannot be withdrawn prior to the beneficiary turning 18 years old.
The $1,000 Federal “Jump-Start” & Employer Contributions
New parents may be eligible for an additional incentive, as every U.S. citizen born between January 1, 2025, and December 31, 2028, can receive a one-time $1,000 seed deposit from the government if they elect to open a Trump Account for their child. This amount does not count towards your total annual contribution amount for the year.
Employers can contribute up to $2,500 per year to a dependent’s Trump Account. These contributions are excluded from your taxable income, but do count towards your annual contribution limit.
Growth Potential: What Could Your Child Save?
The future value of a Trump Account depends on how much your family (and your employer) chooses to contribute and how the stock market performs in the future. But because of the impact of compounding interest, the potential for growth over 18 years could be significant, though results will vary based on the market conditions.
According to estimates from the White House Council of Economic Advisers (CEA) and major financial institutions, here is how a child’s account might look by age 18, depending on market returns and contribution levels:
Note: If left untouched until the child reaches retirement age (60), a maxed-out account has the potential to grow into several million dollars, depending on market performance. This hypothetical example is shown for illustrative purposes only and is not guaranteed.
Flexibility and Future Use
Unlike 529 plans, which are specifically tied to educational expenses, Trump Accounts offer a broader horizon. Once the beneficiary turns 18, the account automatically converts into a Traditional IRA.
While the funds are generally intended for retirement (with standard IRA withdrawal rules applying after age 18), they can also be used for life-defining milestones. For example, your child may be able to access funds for a first-time home purchase, qualified education expenses, or to start a business without the typical 10% early-withdrawal penalty.
Withdrawals may be subject to restrictions and would be taxed at ordinary income rates.
How to Get Started
You can elect to open Trump Accounts for your eligible children using the newly-created IRS Form 4547 when you file your taxes or through an online portal at TrumpAccounts.gov, which is set to launch this summer on July 5th.
If you’re interested in how a Trump Account may complement any existing 529s or brokerage accounts you already have, or if you’re just getting started and want to explore what options are available to you, schedule some time with us today. We’d love to help you build a financial strategy that could benefit everyone in your family.
