Trump Accounts explained for tax professionals

The Treasury Department and IRS have released initial guidance on Trump Accounts, a new federal, tax-preferred savings vehicle for children created under the One Big Beautiful Bill Act (OBBBA). With families able to open accounts in early 2026 and contributions beginning July 4, 2026, this is a topic clients are already asking about. Notice 2025-68 provides the framework that tax professionals can rely on until formal regulations are issued.

What is a Trump Account?

A Trump Account is a special type of individual retirement arrangement treated as a traditional IRA under §408, with additional rules during the child’s minority. These accounts are also referred to as §530A accounts. Their design focuses on long-term, tax-deferred growth for minors, with strict limits on family contributions, investment options and when distributions are permitted before age 18.

Who qualifies and how accounts are established

A Trump Account may be opened only for an eligible individual. The child must be under age 18 at the end of the calendar year in which the election is made and must have a Social Security number issued before that election.

An authorized individual, such as a parent, legal guardian, adult sibling or grandparent, makes the account-creation election using Form 4547, Trump Account Election(s), or, once available, an electronic method. If multiple individuals are authorized to do so, the IRS will apply a priority order to determine who may make the election.

The account must be designated as a Trump Account at account creation; existing IRAs are not eligible for conversion or re-labeling.

Contributions during the growth period

The “growth period” runs until Jan. 1 of the calendar year in which the beneficiary turns 18. No contributions of any kind may be made before July 4, 2026.

A one-time $1,000 federal pilot program contribution is available to eligible children born between Dec. 31, 2024, and Jan. 1, 2029. 

States, tribal governments, the District of Columbia (D.C.), the federal government and qualifying §501(c)(3) organizations may also make qualified general contributions for designated groups of children.

Family members and other individuals may make personal contributions, subject to an aggregate annual limit of $5,000 per beneficiary (indexed for inflation for taxable years beginning after 2027) during the growth period. Pilot program contributions and other government or philanthropic deposits do not create a basis and are excluded from income. Employer contributions are subject to the same tax treatment.

Employers may also contribute under §128, with contributions limited to $2,500 per employee per year, indexed after 2027. These employer contributions count toward the $5,000 annual aggregate limit for the beneficiary.

Is big philanthropy involved, and does it change my client’s limits?

Several large philanthropic organizations have publicly expressed interest in supporting early childhood savings initiatives tied to Trump Accounts. While media reports have mentioned high-profile donors, including the Dell family, no specific organizations, funding amounts or application approvals have been finalized or announced by the IRS.

Until additional guidance is released, tax professionals should avoid making assumptions about which children will receive philanthropic funding or how allocations will be determined. The IRS has indicated more details will be provided before any general funding application process opens.

Investment restrictions for minors

During the growth period, Trump Account investments are limited to eligible investments designed to reduce risk. These generally include passively managed funds that track broad U.S. stock indexes, such as the S&P 500. The rules emphasize diversification and low costs rather than active trading strategies.

Expense ratios may not exceed 0.1%; leverage is prohibited. Derivatives are permitted only to the extent they replicate index performance without creating leverage. These guardrails are intended to promote steady, long-term growth.

Distribution limits before age 18

Distributions during the growth period are limited to:

• Qualified rollovers
• Qualified Achieving a Better Life Experience (ABLE) account rollover contributions
• Returns of excess contributions
• Distributions made after the beneficiary’s death

Absent one of these exceptions, funds must remain in the account until Jan. 1 of the year the child turns 18. Hardship distributions are not permitted.

What changes after the growth period ends

Once the beneficiary reaches age 18, the special Trump Account restrictions generally no longer apply. The account remains classified as a Trump Account but begins operating under rules similar to those for a traditional IRA under §408.

Standard IRA distribution rules apply, including potential early-withdrawal penalties, unless a statutory exception applies. The account can never receive simplified employee pension (SEP) or savings incentive match plan for employees (SIMPLE) IRA contributions. After the growth period, it otherwise functions as a long-term retirement savings vehicle.

Trump Account planning considerations

Trump Accounts offer a highly structured savings option that may not fit every family’s needs. Compared to §529 plans or custodial brokerage accounts, they provide less flexibility but more guardrails. Practitioners should help clients evaluate how these accounts coordinate with existing education and savings strategies, as well as employer-sponsored benefits. Philanthropic contributions may also factor into planning for some families. 

For practitioners who want a deeper look at how Trump Accounts work in practice, NATP’s upcoming webinar, The Tax Pro’s Guide to Trump Accounts, explores current IRS guidance and practical client considerations. The webinar is scheduled for Feb. 19, 2-3 p.m. CT, and is also available on-demand.