By Vincent R. Birardi, CFP®, AIF®, Senior Wealth Advisor at Halbert Hargrove
What Is a Trump Account?
A new type of federal, tax-advantaged savings account for kids was created as part of the One Big Beautiful Bill Act passed into law in 2025 – the Trump Savings Account.
The program is designed to help children build long‑term savings and investment wealth beginning at birth. Think of it as functioning similarly to a hybrid between a traditional Individual Retirement Account (IRA) and a 529 college savings plan.
The federal government designed the program to give children an unprecedented early investment runway: seed capital to help foster a financial future. Projections from the Council of Economic Advisers in August 2025 suggested that under historical average U.S. stock market returns, a child born in 2026 with maximum contributions could accumulate over $300,000 by age 18 – and more than $1 million by age 28.[1]
Who Is Eligible for Trump Accounts?
Trump Accounts will officially launch on July 5, 2026.
Any child under age 18 with a valid Social Security number is eligible to have a Trump Account opened for them. Unlike with Traditional IRAs, no earned income is required to do so. A special pilot provision gives certain children an added benefit: those born between January 1, 2025 and December 31, 2028 receive a one‑time $1,000 government seed deposit, provided an account election is made on their behalf.
How to Open a Trump Account for Your Child
Parents, legal guardians or other authorized individuals open the account by filing IRS Form 4547 or registering online at trumpaccounts.gov. Accounts begin going live on July 5, 2026 per IRS implementation schedules. Once a Trump Account is established, no one else can open a duplicate account for the same child.
How Trump Account Contributions Work
Contributions cannot be made before the July 5, 2026 launch date and will be subject to a $5,000 cap on all combined contributions per child per year, with the exception of public or charitable contributions (see below). Trump Savings Accounts allow for several contribution channels:
- Family & Friends: Up to $5,000 per year in after‑tax contributions, indexed for inflation.
- Employer Contributions: Employers may contribute up to $2,500 (per employee total across dependents), treated as a tax‑free fringe benefit until withdrawn. Contributions by employees to their dependents may also be made pre‑tax through a Section 125 cafeteria plan.
- Public & Charitable Contributions: Charities or government entities are not subject to the $5,000 annual cap. They can contribute with no annual limit, provided the contributions meet equal‑treatment rules (e.g., for all children in a region or birth year).
Rollovers between Trump Accounts do not count toward the $5,000 cap, and contributions do not reduce eligibility for other retirement savings. The $1,000 federal seed deposit also does not count toward the annual limit.
How You Can Invest the Money in a Trump Account
During the “growth period” (birth to age 18), funds must be invested in low‑cost U.S. equity index funds or ETFs (with at least 90% invested in U.S. companies), with strict cost caps (0.10% expense ratios). The Treasury initially administers the accounts, and families may later transfer them to approved financial institutions that offer Trump Accounts.
Trump Account Withdrawal Rules
Keep in mind that all withdrawals will be subject to income taxes, just as they are with a traditional IRA.
Withdrawals are not allowed before age 18. After they turn 18, the account holder can make withdrawals toward sanctioned objectives – like buying a home or paying for education, without financial penalties. But if the funds are used toward non-approved expenses, withdrawals will generally follow traditional IRA rules: a 10% penalty will apply. Otherwise, the account holder can keep the Trump Account and use it for retirement saving and investing, just as they would with a traditional IRA.
The account holder can also choose to roll over their Trump Account into a traditional IRA. The funds can then be used for retirement or other qualified distributions subject to standard federal tax treatment. IRA rules generally penalize withdrawals before age 59½, with exceptions that include a qualified first-time home purchase (withdrawals of $10K maximum allowable without penalty), higher education and medical expenses. After age 59½, you can withdraw IRA funds without penalty but subject to general taxation guidelines.
Key Takeaways
- Trump Savings Accounts are a new tax-advantaged program for children. Created under the 2025 One Big Beautiful Bill Act, the accounts are designed to help kids build long-term investment savings starting at birth.
- Children under 18 with a Social Security number are eligible. Accounts launch July 5, 2026, and certain children born between 2025 and 2028 may receive a $1,000 government seed deposit.
- Annual contributions are capped at $5,000 per child. Contributions can come from family members, employers, and charitable or public sources, with special rules for each.
- Funds must be invested in low-cost U.S. equity index funds during childhood. The structure is designed to maximize long-term compounding through diversified, low-cost investments.
- Withdrawals begin at age 18 for approved uses. Education, home purchases, or retirement savings are permitted uses, while non-qualified withdrawals may face penalties.
- Early investing can help grow wealth over time. Long investment horizons and compounding returns could potentially help build savings for young account holders.
The Power of Compounding – and Financial Literacy Education
At Halbert Hargrove, we believe strongly in long-term planning and thinking; financial education for families is a cornerstone of that. Starting early and being consistent can help harness the power of compounding returns. We hope that these new accounts will hopefully broaden the conversation about the importance of financial literacy for kids – and be a motivator for them to learn more about saving and investing for their futures.
We’d be happy to help provide additional guidance related to any questions you may have about getting one of these accounts started for a family member.
Disclosure:
Halbert Hargrove Global Advisors, LLC (“HH”) is an SEC registered investment adviser with its principal place of business in Long Beach, California. HH may only transact business in those states in which it is registered, notice filed, or qualifies for an exemption or exclusion from registration or notice filing requirements. Registration does not imply a certain level of skill or training. For information pertaining to the registration status of HH, please contact HH or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). Additional information about HH, including our registration status, fees, and services can be found at www.halberthargrove.com.
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