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.

New IRS Guidance Released (Dec. 2, 2025)

On December 2, 2025, the IRS and Treasury released Notice 2025‑68, the first formal guidance on Trump Accounts. The notice confirms how accounts will be created, how contributions must be made, and what types of investments are permitted.

Key updates from the IRS:

• Form 4547 (Trump Account Election) may be used to establish an account and enroll in the pilot program. A draft form is now available. It is also expected that an online tool or application will be available on trumpaccounts.gov at some point in the middle of 2026.
• Contributions cannot be made until July 4, 2026, even if the election form is filed earlier.
• A Trump Account can be created only by filing an election for a child who has not turned 18 before the end of the year the election is made.
• Certain government entities and charities may make contributions, but only to an entire class of beneficiaries, not individual children.
• Funds cannot generally be withdrawn before January 1 of the year the child turns 18.
• The IRS will release additional regulations in 2026 and has requested public comments on several technical issues.

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. 

The IRS has now confirmed that contributions cannot be made until July 4, 2026, even if the Trump Account election (Form 4547) is filed earlier.

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.

New IRS guidance: Charities and certain governmental entities may make contributions, but only to a broad class of eligible children; contributions cannot be targeted to a single child.

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. The IRS has clarified that investments must track the S&P 500 or a similar index of primarily U.S. equities.

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.

The new December 2, 2025 IRS notice confirms that funds generally cannot be withdrawn before January 1 of the year the child turns 18.

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.