The Trump Account

November 14, 2025

Overview

The Trump Account is a new, tax-advantaged savings account for children under 18. It was created by the One Big Beautiful Bill Act (OBBBA) and is codified in IRC §530A. The rules apply to tax years beginning after December 31, 2025. Eligible newborns will receive a one-time $1,000 federal seed deposit if born between January 1, 2025, and December 31, 2028 (i.e., after Dec 31, 2024, and before Jan 1, 2029).

Who Opens It and How It’s Treated

A parent, guardian, or authorized custodian opens the account at a financial institution and designates it as a Trump Account. For tax purposes, it works like an IRA (but it is not a Roth IRA). Treasury and IRS guidance will set out the administrative details.

Contributions

You can contribute up to $5,000 per child each year. This limit will adjust for inflation starting in 2028. In addition to family contributions, eligible newborns receive a one-time $1,000 federal seed deposit as noted above. Contributions are not tax-deductible. Contributions can begin 12 months after enactment—OBBBA was signed on July 4, 2025—so first contributions may begin July 4, 2026.

Investments (Before Age 18)

Until age 18, the account can hold only low-cost mutual funds or ETFs that track a qualified index. Fees must be 0.1% or less, and no leverage is allowed. Collectibles, real estate, and other non-permitted assets are off-limits. The aim is steady, diversified growth—not speculation.

Distributions and Rollovers

Withdrawals before age 18 are generally not allowed. Limited exceptions apply for qualified rollovers or if the beneficiary dies. At age 18, the account automatically becomes a traditional IRA and follows standard IRA rules. At age 17, there is a one-time option to roll the balance tax-free into an ABLE account, a tax-advantaged savings and investment account for eligible individuals with disabilities. Excess contributions must be removed; the net income on excess is subject to a 100% excise tax, and a 6% annual excise tax applies if excess amounts aren’t corrected by the tax filing deadline.

Taxes and Reporting

Before age 18, withdrawals are largely prohibited; in the event of death, amounts may be included in the estate or income. After conversion at age 18, traditional IRA rules and penalties apply. Qualified rollovers must be reported to the IRS within 30 days. Contributions to a Trump Account do not reduce regular IRA contribution limits. Salary deferrals and rollovers from employer plans are generally not allowed.

How It Compares to a Traditional IRA

• Contribution limit: $5,000/year for the Trump Account (indexed) vs. $7,000/year for a traditional IRA in 2025.

• Deductibility: Trump Account contributions are not deductible; traditional IRA contributions may be, depending on income and coverage by a workplace plan.

• Access: Trump Accounts restrict withdrawals until age 18; traditional IRAs allow earlier withdrawals but may impose penalties.

• Excess contributions: Both impose a 6% annual excise tax if not corrected, with additional Trump Account rules on net income for excess amounts.

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Summary

The Trump Account is designed to help families save steadily for a child’s future. It keeps costs low; limits risk and protects funds until adulthood. When the child turns 18, it converts to a traditional IRA so savings can continue to grow under familiar rules.