“Trump savings accounts for children” are a new type of tax-advantaged investment account, created under the One Big Beautiful Bill Act (OBBBA) signed into law in July 2025.
The program is designed to provide a financial head start for children, operating similarly to a traditional IRA with tax-deferred growth.
Features of Trump Savings Accounts
- Federal Seed Money: Children born between January 1, 2025, and December 31, 2028, with a valid U.S. Social Security number, are eligible to receive a one-time $1,000 contribution from the U.S. Treasury.
- Eligibility: All U.S. children under the age of 18 are eligible to have a Trump Account, but only those born within the specific four-year window receive the government seed money.
Contributions
Parents, grandparents, and others can contribute up to $5,000 annually (using after-tax dollars), with the limit indexed for inflation after 2027.
Employers can also contribute up to $2,500 annually per employee’s dependent child, which counts towards the overall $5,000 annual limit.
A recent private donation from Michael and Susan Dell will also provide a $250 contribution to the first 25 million children aged 10 and under in eligible lower-to-middle income ZIP codes.
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Investment Options: Funds in the accounts must be invested in low-cost mutual funds or Exchange-Traded Funds (ETFs) that track a broad index of primarily U.S. equities, such as the S&P 500.
Access and Withdrawals
Funds are locked until the child turns 18.
After age 18, the account functions like a traditional IRA. Withdrawals for qualified expenses such as higher education, a first-time home purchase (up to $10,000), or starting a small business avoid the 10% early withdrawal penalty.
All earnings and government/employer contributions are taxed as ordinary income upon withdrawal.
Opening an Account: While the law is in effect as of July 2025, account custodians (banks/investment firms) are expected to begin offering accounts, and the IRS will release an online form (Form 4547) for sign-ups, starting in May or July 2026.
The new Trump Account provides an additional tool for families, complementing existing options like 529 plans (which offer fully tax-free withdrawals for qualified education expenses) and custodial accounts (which offer more investment flexibility).
Now that you have the specifics of the Trump accounts, we can look at a side-by-side comparison with other options like 529 plans or custodial accounts to see which one might fit your family’s specific goals.
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