July 4, 2026, brought the ability to contribute to a Trump Account, a tax-preferred savings account for children. These accounts can be set up for children, irrespective of their family’s income. All children under 18 should have an account even if contributions will not be made, as the accounts will need to be set up to receive contributions from charities or governments for a child who would qualify for these amounts.
The accounts are designed to help a child learn about saving and investing. With a contribution of $250 a year the account could be expected to grow to $19,000 by the time the child is age 18, $51,000 at age 27 and $878,000 at age 55. With contributions of $5,000 a year (the maximum annual contribution for each child), the account could be expected to grow to $271,000 at age 18, $742,000 at age 27 and $13 million at age 55. These estimates are based on historical S&P 500 averages and are not guaranteed.
The Michael and Susan Dell Foundation will be contributing to children under 10 who live in a zip code whose median household income is less than $150,000 and did not receive the $1,000 contribution from the federal government.
What Is a Trump Account?
A Trump Account is a new type of individual retirement account (IRA) available for children. The Trump Account is designed to allow the child to have a nest egg at age 18 to buy a home, start a business or go to school. Amounts generally cannot be distributed from a Trump Account until the child is age 18. A child can only have one Trump Account at a time.
There is no deduction for contributions to a Trump Account. Cash contributed to a Trump Account will be invested in certain mutual funds or exchange-traded funds that track the S&P 500 or another index of primarily United States equities. The person who set up the account will be able to choose from eligible investments, transfer the Trump Account to another trustee or select another person responsible for the account.
Distributions from a Trump Account after the child turns 18 will be treated just like distributions from a traditional IRA. This includes a 10% additional tax unless an exception applies. These exceptions include distributions for a first home purchase or qualified higher education expenses.
How Are Trump Accounts Set Up?
The federal government will be creating these accounts based on information available to it through federal tax returns and other documents. Taxpayers can also make an election to have a Trump Account set up by the government for a child using the Trump Account mobile app or by signing into your Internal Revenue Service (IRS) account with ID.me. The Trump Mobile App has been set up by the government in partnership with Bank of New York Mellon and Robinhood.
Setting up the account requires the child’s full name, Social Security number, address and birthdate. An account can be set up any time before the year in which a child turns 18; however, the earlier the account is set up, the earlier contributions can be accepted, and the earlier funds can accumulate tax-deferred earnings.
Once the information to set up an account has been submitted, an activation email will be sent from no-reply@TrumpAccounts.Treasury.gov with instructions to complete the account set-up process.
As of July 4, 2026, contributions can be made to the account. These amounts will be invested immediately to start earning tax-deferred benefits. Note that account activation will only be sent by email, not ever by text or phone. Customer support is available through secure, in-app or online callback requests. Phone numbers found through internet search results will be from scammers or fraudsters, so be sure to work through the Trump Account mobile app or the IRS website.
Who Can Contribute to a Trump Account?
Contributions can be made by family members, employers, charitable organizations and governments once an account is set up. As noted above, the annual contribution limit per child is $5,000.
U.S. citizens born after December 31, 2024, and before January 1, 2028, with a Social Security number have an added benefit. These children will receive $1,000 in seed money from the government contributed to the account that has been set up if an election to receive the contribution is made. Making this election costs nothing.
If this is the only contribution the Trump Account ever receives, the account could be expected to grow to $6,000 by the time the child is age 18, $15,000 at age 27 and $243,000 at age 55. These estimates are also based on historical S&P 500 averages and are not guaranteed.
Employers can contribute up to $2,500 per employee for the employee or the employee’s dependents, which will not be taxable to the employee. Like many other benefits that an employer provides employees, these amounts can be made by the employer for an employee’s dependent through salary reduction. The $2,500 limit will be adjusted for inflation after 2027.
While an employer contribution counts as part of the allowable $5,000 annual contribution, the $1,000 contribution for children born between January 1, 2025, and December 31, 2028, and contributions to a child’s account by a charitable organization does not.
Trump Account vs. 529 Accounts
While a decision between the two should be made with your investment advisor because of the investment restrictions for Trump Accounts, an important distinction exists for tax purposes. The Trump Account distribution will be taxable when withdrawn by the child, unless rolled over to a traditional IRA account, and 529 account distributions are not taxed if used for qualifying education expenses.
Gift Tax Consequences of Trump Account Contributions
Because the child cannot access a Trump Account until they are 18, the contribution would be a future interest and not a present interest. Gifts of future interests need to be reported on annual gift tax returns and will be subject to gift tax if not offset by a person’s lifetime exclusion amount. Because Congress made no special provisions treating these contributions as present interests, the U.S. Department of the Treasury and the IRS have issued guidance providing a safe harbor. This safe harbor treats Trump Account contributions as present interests and eliminates the need to file a gift tax return assuming certain conditions are met.
One of these conditions is that the donee only receives gifts from this donor totaling less than or equal to the annual exclusion for present interest gifts, including the Trump Account contribution.
Practical Example
Assume you make cash gifts to one individual of $10,000 and fund that person’s Trump Account with $5,000. In that case, assuming the other conditions are met, no gift tax return is required. If the cash gifts to this person total $15,000, a gift tax return including Trump Account contributions and gifts made to all donees is required to be filed.
All Trump Account contributions made by this donor will not be present interests and will use part of an individual’s lifetime estate tax exclusion amount (currently $15 million) to avoid current tax. To avoid this situation, be sure that the total annual gifts for any one donee, including Trump Account contributions, do not exceed $19,000 in 2026.
Your Guide Forward
Cherry Bekaert tax advisors are here to guide you on how Trump Accounts can impact your individual situation.
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