Starting July 5, 2026, employers, parents, other family members, and even charitable organizations will enjoy a new tax-advantaged savings opportunity for children through “Trump Accounts.” Financial participation may involve a variety of contribution sources, limits, and related options, including the federal government’s seed contribution of $1,000, as an incentive, for babies born between 2025 and 2028. The following FAQs address related considerations for opening these accounts, making contributions, withdrawal purposes and options, and tax implications. Nonprofit organizations may wish to provide Trump Accounts to their employees, as part of their employee benefits package, or, in certain cases, to charitable beneficiaries too.
What is a Trump Account?
Any U.S. citizen who is a child (under 18 years old) with a valid Social Security number is eligible for a Trump Account. A Trump Account is a traditional individual retirement account (IRA) established for a child and designated as a Trump Account at the time it is opened. The child is the account owner and beneficiary. The parent or legal guardian who opened the account serves as the account’s custodian, to manage it until the child turns 18. A Trump Account is thus essentially a savings and investment tool, which may be used for a child’s education or other qualified purposes. Special rules also apply for potential investments and growth.
How is a Trump Account Opened?
The Internal Revenue Service’s Form 4547 instructions provide detailed information about establishing a Trump Account. If the person opening the initial Trump Account is electing at the same time to receive the federal government’s $1,000 seed contribution, the individual must be anticipating to claim the child as a dependent on their corresponding year tax return. If a seed contribution is not requested, then the authorized individual to open the Trump Account may be a legal guardian, parent, adult sibling, or grandparent of the eligible person, in that order of priority. For example, if an adult sibling is making the election, this person would be representing there is neither a legal guardian nor parent of the child available to make the election. Otherwise, this person would not be authorized to open the initial Trump Account for the child.
Who may contribute to a Trump Account?
Five types of contributions can be made to a Trump Account during the specified growth period. The applicable growth period begins the date the account is established and ends on December 31 of the year prior to the calendar year in which the child turns 18. Here are the options:
1. Children born between January 1, 2025 and December 31, 2028 are eligible for the federal government’s $1,000 seed money contribution, for their Trump Accounts;
2. Parents, guardians, other family members, and friends (anyone) may make contributions to a Trump Account once opened;
3. Employers may contribute to Trump Accounts of their employees or dependents of their employees - and such contributions are excluded from the taxpayer’s gross income;
4. Qualified rollover contributions or transfers from a prior Trump Account may be made; and
5. General funding contributions can be made by 501(c)(3) tax-exempt organizations or government bodies that specify a qualified class of account beneficiaries to whom the contributions may be distributed.
Generous philanthropy has been heartily encouraged and obtained. For example, Michael and Susan Dell have pledged to donate $6.25 billion to provide children living in ZIP codes with median incomes below $150,000 with $250, to each qualified children under 11 years old.
What are the contribution limits?
Employers may make contributions to Trump Accounts that are not counted as the employee’s gross income for tax purposes, up to an annual $2,500 limit per employee by establishing and sponsoring Trump Account Contribution Programs (TACPs). These employer contributions come directly from employer funds. Alternatively, employers may offer a Trump Account contribution option for employees to elect to reduce their pay via salary reduction under a section 125 cafeteria plan, likewise on a pre-tax basis and up to a $2,500 limit, but only for contributions made to the Trump accounts of employees’ dependents. Familiar types of section 125 cafeteria plans include flexible spending accounts (FSAs), health insurance, health savings accounts (HSAs), or other qualified benefits for which employees pay with pre-tax dollars. Both employer direct contributions and employee pre-tax contributions count towards the $2,500 annual limit. The Treasury Department and the IRS reportedly intend to issues rules related to the coordination of Trump Account contribution programs and section 125 cafeteria plans.
A total $5,000 limit generally applies, and both the $2,500 amount and the total $5,000 will be indexed for inflation. Notably, however, other contributions do not count against the total $5,000 limit, such as the federal government’s $1,000 seed contribution amount and philanthropic contributions such as provided by the Dells.
What penalties and other rules may apply?
As noted above, applicable limits provide certain restrictions. Any individuals who make improper elections under the pilot program will be subject to penalties. Additionally, distributions during the growth period are generally prohibited. The only distributions that can be made from a Trump Account during the growth period are qualified rollover contributions to a rollover Trump Account. .Withdrawals made during the growth period also may be subject to tax penalties resulting from early withdrawal, but the IRS has not issued rules yet providing guidance on such matters. After the growth period, Trump Account distributions are governed by the rules governing traditional IRAs.
What further guidance lies ahead for Trump Accounts?
The U.S. Treasury Department and the Internal Revenue Service has issued Notice 2025-68, containing extensive guidance about Trump Accounts. Additionally, they have issued an administrative Notice of Proposed Rule-Making for which comments were due by May 8, 2026.
Accounts may be opened as of July 5, 2026, via IRS Form 4547 (to be attached to individual tax returns) or the dedicated Trump Account online portal.
As with all tax matters, however, employers should consult further with their benefits providers, and employees should confer with their accountants. Charitable organizations interested in generally funding Trump Accounts, albeit likely on a lesser scale than the Dells, should seek specialized tax guidance about such philanthropic opportunities.
