Before Trump Accounts launch on July 4

Starting July 4, 2026, the IRS will begin accepting contributions to Trump Accounts, a new type of tax-advantaged savings account for kids. Formally known as Section 530A accounts, they give parents, grandparents, employers and even the federal government a fresh way to build long-term savings for children under age 18. Here's what you need to know before the questions start rolling in.

What is a Trump Account? 

A Trump Account is a new type of traditional individual retirement account (IRA) created under the Working Families Tax Cuts Act for the exclusive benefit of an eligible child who's under age 18 and has a valid Social Security number. The IRS treats it as an IRA with special rules that apply only during the "growth period," which runs until Jan. 1 of the year the child turns 18. After that, traditional IRA rules generally take over.

The $1,000 pilot program

For U.S. citizen children born between Jan. 1, 2025, and Dec. 31, 2028, who hold a valid Social Security number, the federal government will deposit a one-time $1,000 contribution under §6434. It's a meaningful head start, and it costs the family nothing.

How clients apply

Clients have two ways to open an account. They can file Form 4547, Trump Account Election(s), with their 2025 tax return, or complete the election online through trumpaccounts.gov. Only an authorized individual, typically a parent or legal guardian, can make the election and each child is limited to one Trump Account. Encourage clients to file early. Submitting Form 4547 ahead of the launch means the account is ready to receive contributions the moment the program goes live. 

Contributions and tax impact

Once the account is open, contribution rules look like this:

• Total contributions from individuals and employers are capped at $5,000 per child per year.
• Employers may contribute up to $2,500 per year (adjusted for inflation after 2027), generally excluded from the employee's taxable income.
• Pilot program contributions, qualified general contributions and qualified rollover contributions don't count toward the $5,000 annual limit.
• Contributions must be made within the calendar year. The deadline doesn't extend to April 15 like it does for other IRAs.

Contributions from individuals create basis. Pilot program contributions, employer contributions and qualified general contributions don't. That distinction matters when distributions start.

Qualified and non-qualified distributions

During the growth period, distributions generally aren't allowed. Once the child turns 18, traditional IRA rules apply. Distributions are taxed as ordinary income to the extent they aren't from after-tax (basis) contributions. Early withdrawals before age 59½ may trigger the 10% additional tax.

How Trump Accounts fit with other savings tools

Trump Accounts don't replace §529 plans, Roth IRAs or Coverdell education savings accounts. They sit alongside them. A teen with earned income can still contribute to a Roth IRA, and Trump Account contributions don't reduce that limit. Your role is helping clients see where each piece fits in their family's bigger financial picture.

Want a deeper dive? Join the NATP webinar

NATP is hosting a 50-minute webinar, Demystifying Trump Accounts, covering everything from setup to distributions. Presented by Jaye Tritz, CFP®, EA, the session walks you through the application process using Form 4547, eligible contributions and their tax impact, qualified and non-qualified distributions, and how Trump Accounts interact with other child-related investment accounts.

Save the date: Tuesday, July 21, 2-3 p.m. CT. Register today and walk into your next client meeting confident and ready.