Trump Accounts: What Every Family Should Know A retirement-seed savings account for children |
A new tax-advantaged IRA for children — here’s what it is, who qualifies, and how it can be used once your child grows into it.
$1,000 Federal seed deposit (born 2025–2028, if elected) | $5,000 Max. combined annual contribution per child | $2,500 Max. employer contribution, counted inside the cap | 0.10% Max. fee on eligible U.S. index fund investments |
What It Is
On July 4th, 2026, the Trump Accounts officially opened for contributions. They are a new type of savings account and could become a new type of IRA created under IRC §530A for children under 18. It's designed to give the next generation an early, tax-advantaged head start on long-term savings — funded from birth, growing throughout childhood, and available for a lifetime of retirement planning by the time your child reaches adulthood.
Who Qualifies & How to Open
Any U.S. child under 18 with a Social Security number— there's no income test and no earned-income requirement. A parent or guardian can open the account by filing IRS Form 4547 or through the mobile app or visiting trumpaccounts.gov. Children born between January 1, 2025, and December 31, 2028, are also eligible for a one-time $1,000 federal seed deposit, at no cost to the family. From there, family, friends, and even employers can contribute up to $5,000 combined per year (employer contributions capped at $2,500, counted inside that total).
How it Grows & Investment Options
During childhood, the law requires the account to be invested in a low-cost, diversified U.S. stock index fund such as ‘SPYM’ (fees capped at 0.10%), and no withdrawals are permitted until the year the child turns 18. These guardrails keep the account solely focused on long-term growth rather than short-term spending.
Using the Account Over Time
At 18, the special rules expire and the account becomes a standard Traditional IRA in the child's name — since it was always a type of IRA, just with fewer restrictions now. From there:
- Keep contributing, if there's earned income
- Withdraw (taxable; 10% penalty before 59½, with exceptions like:
- First home, education, or disability
- Roll over into an employer plan or another IRA
- Convert to a Roth IRA — anytime, no deadline
- The Roth conversion option has no deadline — it can happen at 18, 30, or any year in between or after. Family contributions aren't taxed again on conversion, but investment growth and the $1,000 federal seed are taxed as ordinary income when converted. Spreading conversions across several years, rather than converting all at once, can help manage the tax impact — a strategy we frequently model for our clients and their families. This path could potentially become the most powerful path if utilized correctly as it allows for essentially – TAX FREE compounding growth from birth alongside TAX FREE distributions after 59.5 years old.
Good to Know
This isn't free money with no strings attached. Contributions aren't tax-deductible, and the account is locked until 18, so it's not a substitute for a 529 plan if education is the near-term priority, and it isn't an emergency fund. We see it as a complement to what you're already doing — one more coordinated building block in your family's broader savings strategy, and a particularly meaningful gift option for grandparents.