Section 530A “Trump” Accounts were established under a provision of the One, Big, Beautiful Bill Act, which was passed in 2025. They are scheduled to become available around July 2026.
These are tax-advantaged custodial accounts for minors, similar to IRAs. The primary difference is that the child does not need earned income to contribute. In this article, we’ll break down the basics of these accounts to try to help you understand if you should open one and contribute.
Free Money
One reason these new accounts have received so much attention is the free money that comes with them. The US government is going to deposit $1,000 to all new accounts for children with Social Security numbers who were born between January 1, 2025 and December 31, 2028.
Several other wealthy individuals and foundations have also pledged gifts to these accounts. For minors born before January 1, 2025, the Michael & Susan Dell Foundation will contribute $250 to the first 25 million accounts in ZIP codes with a median income below $150,000. Ray Dalio has also committed to a gift for eligible children in Connecticut.
The phrase “Don’t look a gift horse in the mouth” applies in this case. It’s free money, don’t think too hard about it. While it may not be a life-changing amount and comes with restrictions, there’s no reason to pass it up.
Opening an Account
As of right now, there are two ways to open an account. You can file IRS Form 4547, or you can use the online portal at trumpaccounts.gov. You may have already filed the form with your 2025 tax return. If not, you can sign up anytime before the year your child turns 18.
Funding, Tax Treatment, and Contribution Limits
The total combined contribution limit for these accounts is $5,000 per year. The amount will increase with inflation starting in 2028. In the calendar year when the beneficiary turns 18, the account can remain a Trump account or convert to an IRA. Either way, standard IRA contribution rules apply after that. The accounts are tax-deferred, meaning capital gains, dividends, and interest are not taxed while the money is in the account.
There are a few ways to get money into one of these accounts.
The first is a contribution from a government entity or a qualified organization such as a 501(c)(3) charity. For example, the $1,000 seed deposit from the Federal Government or the $250 from the Dell Foundation mentioned above. These contributions do not count towards the $5,000 limit and do not create any cost basis in the account, meaning they are fully taxable as ordinary income when withdrawn.
Individuals such as parents, grandparents, or friends can also make a direct contribution to the account. This amount counts toward the $5,000 limit but is made on an after-tax basis, meaning the contribution will not be taxed upon withdrawal.
Another contribution method that differentiates these accounts from individual accounts is the ability to fund through pre-tax payroll deductions, if an employer offers this option. Not only can an employee make this contribution directly from their paycheck, but employers can also contribute up to $2,500 per employee (NOT per child). Both employee and employer contributions will count toward the $5,000 limit. Because they are made with pre-tax dollars, the amount will be fully taxable when withdrawn.
Last, trustee-to-trustee rollovers from other Trump accounts for the same beneficiary will be permitted. The entire value of the account must be rolled over; no partial transfers are allowed. Basis in the original account will transfer over.
Withdrawals
Money in Trump accounts will be inaccessible until the beneficiary turns 18. In the year the child turns 18, IRA rules will generally apply. Withdrawals before age 59.5 will be hit with a 10% early distribution penalty, unless for certain exempt purposes. These include $10,000 for first-time home purchases, certain education expenses, $5,000 for birth or adoption costs, qualifying medical/disability expenses, or terminal illness. Accounts can also be converted to Roth IRAs without penalty, but be aware of potential income taxes owed on pre-tax contributions and growth.
Available Investments
Investment options in a Trump account are intentionally limited to reduce complexity and costs, and to ensure money is invested in (mostly) US companies. Choices will be limited to mutual funds or ETFs that are at least 90% invested in US firms. Expense ratios for funds cannot exceed 0.10%, and no leverage will be allowed.
Should You Open an Account and Contribute?
If your child qualifies for an automatic contribution from the government or foundation, there’s no financial reason not to open an account to receive the free money. Ditto, if your employer participates in the program and contributes or matches your contribution.
When it comes to your own money, you’ll want to consider the ultimate purpose for the funds before deciding if you should contribute. Remember, there are other accounts available for minors that may be better suited to your goals.
For education, a 529 may be a better option, as the money can be used tax-free for qualified expenses. It can also be transferred to a different beneficiary, used for K-12 tuition, or rolled over to a Roth IRA if the original beneficiary doesn’t go to college.
If you value flexibility and want more investment options, or the ability to use the money before the beneficiary turns 18, a taxable custodial account could make more sense.
A contribution to a Trump account might make the most sense if you want to help the minor get a leg up on long-term retirement savings. Because there is no income requirement, you can kickstart your child’s retirement savings one or two decades earlier than they otherwise would. While the dollar amounts may not move the needle much today, an extra 10 to 20 years of compounding could lead to sizable savings down the road.
As with any personal finance decision, careful consideration should be given to your unique situation and goals. Feel free to reach out if you'd like more information or would like us to help you understand if you should contribute.