The One Big Beautiful Bill Act (OBBBA) creates a new savings opportunity for families known as Trump Accounts. These are essentially retirement-style accounts for kids — a tax-favored savings vehicle that can grow over time and eventually transition into a traditional IRA once your child reaches adulthood. While many key regulations and IRS guidance aren’t yet finalized, here’s a preliminary overview of how these accounts are intended to work so you can begin planning.

How to Open a Trump Account for Your Child

Starting in 2026, parents of babies born between 2025 and 2028 may be eligible to enroll their children in the Trump Account pilot program. Eligible newborns — U.S. citizens with a Social Security Number — will receive a $1,000 federal contribution. This “welcome to the world” gift from Uncle Sam is tax-free. 

Trump Accounts aren’t just for newborns, however. Children born before 2025 who are still under 18 can open a Trump Account, but they won’t receive the initial $1,000 federal contribution. 

Account Contributions Before Age 18

Beginning July 4, 2026, parents, grandparents and others can contribute up to $5,000 per year to a child’s Trump Account. The contribution limit will be adjusted annually for inflation starting in 2028. While contributions aren’t tax-deductible, they grow federal-income-tax-free until the child turns 18.

Employers can also participate. Starting in 2026, companies may contribute up to $2,500 annually to employees’ Trump Accounts or those of their dependents. These contributions are tax-free for recipients and deductible for the employer. Employer contributions will count toward the $5,000 annual contribution limit. Some local governments and nonprofit organizations may even offer qualified general contributions, though details are still emerging.

Before age 18, Trump Accounts can invest only in stock mutual funds or exchange-traded funds mirroring the S&P 500 or another American stock index. These limitations are designed to keep the investment options simple, stable and low-cost.

Changes After Age 18

In the year that a Trump Account beneficiary turns 18, the account is generally treated as a traditional IRA, allowing the young adult to continue saving for retirement. Contributions after that point require earned income, and standard IRA rules apply, including potential early withdrawal penalties before age 59½.

You also might want to consider converting a former Trump Account from a traditional IRA to a Roth IRA. This option could be a tax-smart move while a young person is in a relatively low tax bracket. 

Investing in Your Child’s Future

For parents and grandparents looking to set the next generation on a strong financial path, Trump Accounts offer an appealing combination: government seed money, tax-free growth and long-term compounding power. And, unlike 529 plans or Coverdell accounts, funds aren’t restricted to education expenses — they can be used for anything once the child is an adult, but withdrawals are still subject to the same rules as IRAs.

FAQ: Trump Accounts

1. Who is eligible for a Trump Account? Newborns born between 2025–2028 who are U.S. citizens with a Social Security Number are eligible for the $1,000 federal contribution. Children under 18 born before 2025 can open an account but won’t receive the initial contribution.
2. How much can I contribute? Parents, grandparents, and others can contribute up to $5,000 per year per child, combined. Employers can contribute up to $2,500 per year, which counts toward the $5,000 limit.
3. What can the funds be invested in? Until age 18, Trump Accounts can invest only in stock mutual funds or exchange-traded funds mirroring the S&P 500 or another American stock index. After 18, standard IRA investment options apply.
4. When can the child access the funds? Once the account is treated as a traditional IRA at age 18, withdrawals follow standard IRA rules, including potential penalties for early withdrawals before 59½.
5. Can the account be converted to a Roth IRA? Yes, converting to a Roth IRA may be a smart tax strategy for young adults in lower tax brackets.

As you plan for your family’s financial future, this new account could be a valuable tool.