Trump Accounts are a new, tax-advantaged, individual retirement account intended for children under the age of 18. They were created as a part of the HR 1 bill passed in July 2025, and they have unique requirements, rules, and investment restrictions.
Trump Account Eligibility and Account Requirements
- The child must be under 18 by the end of the year the account is opened
- The child must have a valid Social Security number
- No withdrawals are allowed during the growth period of the account
- Growth period: Date of the account opening until December 31 in the year prior to the child’s 18th birthday
- Accounts can be opened beginning July 6, 2026
- Annual account funding is not allowed after year-end (unlike IRA accounts), so contributions must be made prior to December 31
Trump Account Investment Rules and Restrictions
Robinhood will serve as the brokerage and initial trustee for Trump Accounts, partnering with The Bank of New York Mellon Corporation, which was selected by the U.S. Treasury Department as the financial agent and custodian. More information is still to come on whether other brokerages will be able to open them and whether account owners can move the account to their preferred brokerage firm.
Investments will generally be low-cost mutual funds or ETFs that track a broad U.S. stock index; there are no leveraged funds, and annual fees are capped at approximately 0.10%. Investments including cryptocurrency, international stocks, individual stocks, bonds, or money market accounts, among others, are not allowed. Trump Accounts are non-deposit investment accounts, and they are not FDIC insured.
It is not yet clear how the funds will be invested or how much control parents, custodians, or account owners will have over the investments.
Trump Account Contribution Limits and Funding Rules
Annual contributions up to $5,000 for 2026 and 2027 are allowed from a variety of sources, including parents, relatives, employers, and charitable organizations. Beginning in 2028, the contribution limit will be indexed annually for inflation. Employer contributions are limited to $2,500 and count towards the total annual limit. Additionally, employees may make pre-tax contributions under a Section 125 cafeteria plan.
Federal and Private Contributions to Trump Accounts
- Children born between July 1, 2025, and December 31, 2028, qualify for a one-time, $1,000 federal government contribution. Upon opening an account, the required election must be made to have this contribution made on the child’s behalf.
- Alternatively, the Dell Foundation has pledged funds to contribute $250 to eligible children age 10 and under who live in qualifying ZIP codes and are not part of the federal newborn funding group. Upon opening an account, the first 25 million qualifying children are eligible for the contribution.
Gift Tax Rules for Trump Account Contributions
- The IRS clarified that contributions to Trump Accounts qualify for the annual gift tax exclusion. In contrast, 529 plans have a statutory exemption that permits up to five years of contributions made at once (i.e., “superfunding”), though a gift tax return is generally required to make that election.
- The issuance of this revenue procedure removes ambiguity regarding the gift tax treatment of Trump Account contributions, making Trump Accounts more attractive—or at least less burdensome to fund.
Trump Account Withdrawal Rules
Trump Accounts are designed to be long-term savings accounts for children, so withdrawal rules are restrictive before age 18. Withdrawals are not permitted during the growth period, but exceptions may apply for death, correcting excess contributions or rolling funds to another eligible account. Beginning on January 1 of the year the beneficiary turns 18, the account restrictions generally end, and the account is treated like a traditional IRA, having withdrawal exceptions for higher education and first-time homebuyer costs.
Similar to a traditional IRA, contributions are returned tax-free and earnings are taxed as ordinary income. It will be imperative to track all contributions to Trump Accounts, as they are made to ensure that the withdrawals are taxed correctly.
Unlike a 529 plan, when the child turns 18, the beneficiary (child) gains control of the account without restrictions.
Trump Accounts vs. 529 Plans vs. Roth IRAs
There are various unknowns as we wait for further guidance and for Trump Accounts to become accessible. These accounts could be considered a viable alternative or supplement to other account types, such as 529 plans and Roth IRAs, as part of your education planning strategy.
| Trump Account | 529 Plan | Roth IRA | |
|---|---|---|---|
| Contribution Rules | • $5,000* annual limit • No income limits • Potential for $1,000 federal funding or $250 Dell Foundation funding | • $19,000* annual contribution limit with annual gift tax exclusion • No income limits | • $7,500* maximum contribution • Income limit of $153K* & limited to earned income |
| Withdrawal Rules | • No withdrawals until age 18 • Follows traditional IRA rules after age 18 | • Withdrawals allowed for K-12, college, post-secondary, and trade education | • No withdrawal limitations |
| Taxability | • Basis is tax-free • Earnings are taxed as ordinary income • 10% penalty, unless withdrawal exemption applies | • Basis is tax-free • Earnings are tax-free if used for education • Earnings are taxed as ordinary income & 10% penalty assessed if not used for education | • Basis is tax-free • Earnings are taxed as ordinary income & 10% penalty assessed, unless withdrawal exemption applies • Tax-free withdrawals after age 59.5 |
| Other Considerations | • Potentially restrictive investment rules • Potential gift tax consequences | • “Superfunding” of $95K* over 5 years is allowed • Can modify beneficiary if funds are unused • Potential for limited Roth IRA conversion later in life | • Must have W-2 or 1099 earned income to contribute |
*Note: Amounts listed are for 2026 and will be indexed for inflation annually.
Unlike 529 plans, which restrict withdrawals to qualified education expenses, or Roth IRAs, which impose age-related restrictions, Trump Accounts allow beneficiaries to gain full access to the funds at a relatively young age. As a result, parents and contributors should carefully consider not only when the child will receive control of the assets, but also how the funds may ultimately be used.
Trump Accounts and Roth IRA Conversions
After the growth period, funds in a Trump Account may be eligible for a Roth conversion. If a child has earned income and contributes to a Roth IRA before age 18, it is possible they could have a substantial Roth account balance over time and later convert their Trump Account assets to a Roth after age 18. This is one example of how using these plans jointly could provide additional long-term retirement planning benefits.
Contact Clark Nuber Today
As we await guidance and more information on Trump Accounts, please contact us if you would like to discuss further educational planning options and to discuss whether a Trump Account could be used in tandem with your current educational plan.
Senior Tax Manager Martha Gustavson, CPA, MST, contributed to this article.
© Clark Nuber PS, 2026. All rights reserved.