What Are Trump Accounts? 2026 Tax Guide & Enrollment FAQ
Wondering if your child is eligible for a Trump Account in 2026 and if you should open one? This TurboTax guide explains the eligibility rules, contribution limits, and steps for opening a Trump Account for your child. Don’t miss out on this tax-advantaged savings option to kickstart your kid’s future.
The One Big Beautiful Bill that passed includes permanently extending tax cuts from the Tax Cuts and Jobs Act, including increasing the cap on the amount of state and local or sales tax and property tax (SALT) that you can deduct, makes cuts to energy credits passed under the Inflation Reduction Act, makes changes to taxes on tips and overtime for certain workers, reforms Medicaid, increases the Debt ceiling, and reforms Pell Grants and student loans. Updates to this article are in process. Check our One Big Beautiful Bill article for more information.
Key Takeaways
- Trump Accounts are a new type of traditional IRA for kids, but there are some important differences – particularly before the year the child turns 18.
- A Trump Account can only be opened for a child who is under 18 years old with a Social Security number valid for work in the U.S.
- Use IRS Form 4547 to request the government to open a Trump Account (there’s an online version of the form on TrumpAccounts.gov.
- For 2026, contributions to a Trump Account during the year are generally limited to $5,000 before the year the child turns 18.
- Contributions to a Trump Account aren’t tax deductible, but funds in an account grow on a tax-deferred basis until they’re withdrawn.
What is a Trump Account?
A Trump Account is a new type of tax-advantage savings account for kids. They were established by the “One Big Beautiful Bill” (also known as the Working Families Tax Cut), which was signed into law on July 4, 2025.
Trump Accounts are actually a type of traditional individual retirement account (IRA), but they’re opened for the benefit of a child (the beneficiary). Contributions to a Trump Account aren’t tax deductible. But funds in an account grow on a tax-deferred basis, meaning there’s no tax on money in the account until it’s withdrawn.
Under a temporary pilot program, the U.S. government will deposit $1,000 into a Trump Account for eligible U.S. citizens born from 2025 through 2028. Parents and others can also contribute to a child’s Trump Account until the year the child turns 18. After that point, the child takes control of the account and can put money in it if they have earned income.
You generally can’t take money out of a Trump Account until the child is in control of the account. Once that happens, most of the rules governing withdrawals from traditional IRAs apply. As a result, a 10% penalty may be imposed if money is taken out of a Trump Account before the beneficiary is 59½ years old. However, you can pull money out of an account penalty-free before then for certain reasons, such as to pay higher education expenses or buy a first home.
Who is eligible for a Trump Account?
A Trump Account can only be opened for a child who is 17 years old or younger on the last day of the year in which an election to open an account is made. For example, the child must have been born by 2009 for elections made in 2026.
The child must also have a Social Security number that’s valid for employment and issued before the election to open a Trump Account is made.
TurboTax Tip:
“Through its pilot program, the U.S. government has promised to make a one-time contribution of $1,000 to each Trump Account for children who are U.S. citizens born between January 1, 2025, and December 31, 2028. Eligibility also depends on whether the person opening the account anticipates that the child will be their qualifying child for federal tax purposes.” – Kelly Wallace, CPA, Homedale, Idaho
How can I open a Trump Account for my child?
To have a Trump Account opened for an eligible child, you must file an election form (Form 4547) with the IRS. This authorizes the U.S. government to create and maintain an account for the child.
You can file Form 4547 with your federal income tax return (including with a return filed through TurboTax). There’s also an online version of the form on TrumpAccounts.gov, which is the official government website for Trump Accounts.
If the eligible child is a U.S. citizen and born from January 1, 2025, to December 31, 2028, you can also use Form 4547 to request $1,000 in “seed money” from the U.S. government. This money will be deposited into the Trump Account under a federal pilot program.
Only one Trump Account per child is allowed. So, if an election has already been made to open an account for a child, additional elections for the same child won’t be honored.
Who can open a Trump Account for a child?
Who can request a Trump Account for a child depends on whether an election to receive a $1,000 pilot program contribution is also being made on Form 4547.
If a pilot program payment is elected on Form 4547, the request to open a Trump Account can only come from a person who expects to claim the child as a “qualifying child” for the tax year in which the election is made (typically a parent). A “qualifying child” can be claimed as a dependent on your tax return (for more information, see our article on the Rules for Claiming Dependents).
If a pilot program contribution isn’t elected, a Trump Account can be requested by, in order of priority, the child’s:
- legal guardian
- parent
- adult sibling
- grandparent
Because of the priority order, a lower-priority person can only request a Trump Account for the child if a higher-priority person isn’t available. For example, an adult sibling can only request a Trump Account if a legal guardian or parent isn’t available.
Who can contribute to a Trump Account?
Once a Trump Account is established, pretty much anyone can contribute money to the account before the year the child turns 18, including the child, parents, family members, and friends (although contributions to a Trump Account can’t be made until July 4, 2026).
Contributions can also come from:
- U.S. government pilot program – Contributions of $1,000 for accounts set up for U.S. citizens born from 2025 through 2028
- Employers – Contributions to either an employee’s account or the account of an employee’s dependent
- Tax-exempt organizations and governments (including federal, state, local, and tribal governments) – Contributions made in equal amounts to the accounts of every child in a “qualified class” that’s based on where the child lives and/or the child’s age
All the funds in one Trump Account can also be transferred directly to another Trump Account for the same child. This is called a “qualified rollover contribution.”
Once the child takes control of the account (January 1 of the year they turn 18), they’re the only one who can contribute to their Trump Account. Also, since the general rules for IRAs apply at that point, they also must have taxable “earned income” (for example, wages or salary) to put money in the account.
How much can you contribute to a Trump Account?
For 2026 and 2027, contributions to a Trump Account are generally limited to $5,000 per year before the year the child turns 18. However, contributions from tax-exempt organizations, governments (including $1,000 contributions through the U.S. government pilot program), and qualified rollovers don’t count toward the annual contribution limit.
In addition to the general contribution limit, employers can’t contribute more than $2,500 per year to a Trump Account set up for an employee or an employee’s dependent. This cap applies on a per-employee basis. So, for example, if an employee has two children, the total amount contributed to Trump Accounts for both children can’t exceed $2,500. Also, employer contributions count toward the overall $5,000 contribution limit (although they’re not included in the employee’s gross income).
Starting in 2028, both the $5,000 general contribution limit and the $2,500 limit on contributions from employers will be adjusted annually to account for inflation.
The annual contribution limit for IRAs applies when the child takes control of their Trump Account (January 1 of the year they turn 18). For instance, the total contributions to all of your IRAs for the 2026 tax year can’t be more than the lesser of:
- $7,500 ($8,600 if you’re at least 50 years old)
- your taxable earned income for the year
If contributions for any year are greater than the annual limit, a 6% penalty is due unless the excess contributions are withdrawn by the due date for filing the beneficiary’s income tax return (including filing extensions).
However, it’s important to note that “IRA contribution limits are not affected by deposits to Trump Accounts before the year the child turns 18,” according to Kelly Wallace, a CPA and TurboTax Expert based in Homedale, Idaho. So, for instance, you can contribute the maximum to both an IRA and Trump Account during the year.
Are contributions to a Trump Account tax deductible?
Contributions to a Trump Account made before the year the child turns 18 aren’t tax deductible.
However, once the child takes control over the account (January 1 of the year they turn 18), they may be able to deduct contributions to the account. At that point, the normal rules for the deductibility of contributions to a traditional IRA apply.
How are funds in a Trump Account invested?
Before the year the child turns 18, money in a Trump Account can only be invested in mutual funds or exchange traded funds (ETFs) that track an index of primarily U.S. companies (such as the S&P 500 index) and meet certain other requirements.
Starting with the year the child turns 18, these restrictions go away. At that point, funds in the account can be invested in the same way as money in a traditional IRA.
When can you withdraw funds from a Trump Account?
For the most part, “no withdrawals are allowed from Trump Accounts until the year the child turns 18,” says Wallace. However, exceptions to this general rule apply for the:
- rollover of all funds to another Trump Account
- rollover of all funds to an ABLE Account during the year the child turns 17
- withdrawal of excess contributions
- death of the child
When the child takes control of a Trump Account (January 1 of the year they turn 18), the rules for withdrawing funds from a traditional IRA kick in. That means the child – now the account holder – must pay income tax on any distributions from the account.
It also means you may owe a 10% early withdrawal penalty on money taken out of a Trump Account before you turn 59½ years old. The penalty is in addition to any income tax you owe on those funds.
However, you won’t owe the penalty in certain situations. For example, the 10% penalty generally doesn’t apply if the funds are used for:
- birth or adoption expenses (up to $5,000 per child)
- disaster recovery expenses (up to $22,000)
- emergency expenses (up to $1,000)
- health insurance premiums paid while unemployed
- higher education expenses
- home purchases (up to $10,000 for first-time homebuyers)
- medical expenses exceeding 7.5% of your adjusted gross income that aren’t reimbursed
The penalty is also waived if the beneficiary dies or becomes disabled, is the victim of domestic abuse (withdraw up to the lesser of $10,000 or 50% of the account), or must pay back excess contributions.
This is not an exhaustive list – other exceptions to the penalty may also apply.
Who controls a Trump Account?
Until the beneficiary of a Trump Account reaches the age of majority (18 in most states), the person who made the election to open the account generally controls the account (subject to any laws or other restrictions that may limit their actions).
As a result, they can choose among available investment options, transfer funds to another Trump Account or ABLE Account, and take any other legal action to manage the account.
Once the beneficiary is treated as an adult under state law, control over the account shifts to them.
Will I get any tax forms after opening a Trump Account?
After a Trump Account is opened for an eligible child, the account trustee will send you a Form 5498-TA each year to report:
- contributions to the account during the year
- basis or investment in the account at the end of the year
- fair market value of the account at the end of the year
The IRS receives a copy of the form, too. (A draft version of the form is currently available on the IRS website.)
When money is taken out of a Trump Account, it will be reported on Form 1099-R (Box 7c should be checked). If the withdrawal is rolled over into an ABLE account, that should be noted in Box 7b. In addition, if excess contributions are withdrawn from a Trump Account, Box 7d should report earnings attributable to those contributions (the earnings are taxable).
How do Trump Accounts differ from other savings accounts for kids?
“Trump accounts are designed to complement other saving options,” says Wallace. Parents have several options beyond Trump Accounts when it comes to savings accounts for their children, including 529 plans, Coverdell Education Savings Accounts (ESAs), Uniform Transfers to Minors Act (UTMA) accounts, and Roth IRAs. “Overall, the Trump Account is a nice addition to savings strategies for your young child,” adds Wallace, “but it’s not the only option.”
Let’s take a quick look at the other types of accounts mentioned above so you can compare them with Trump Accounts and make smart money moves for your child’s future.
529 plans. Parents (and others) can open an account through a 529 plan to save for a child’s education. Whoever opens the account also maintains control of it, even after the child turns 18. Most 529 plans are set up and managed by states, but you’re free to shop around if you don’t like your state’s plan.
While there’s no federal income tax deduction for contributions to a 529 plan, you might get a break on your state income tax return when you put money into a 529 account. Money in the account grows tax-free – as long as the funds are used for qualified educational expenses. If money in a 529 plan is used for other purposes, it’s subject to income tax and a 10% penalty when withdrawn.
There’s no federal limit on annual contributions to a 529 plan, but states typically cap the total amount in an account. You usually have some choice when it comes to how money in your 529 account is invested, but options are generally more limited when compared to other savings accounts for kids.
If you have unused funds in a 529 account (for example, your child doesn’t go to college), you don’t necessarily have to withdraw it and pay the tax and penalty. For example, you can use up to $10,000 of the leftover money to pay off student loan debt, roll over up to $35,000 of it to a Roth IRA for the child, or transfer it to a family member’s 529 account (other options are also available).
Coverdell ESAs. Like 529 plans, Coverdell ESAs are used to save for a child’s education. When an account is opened, a “responsible individual” is named to manage the account (usually a parent or guardian). When the child turns 18, control of the account can be transferred to the child – but it doesn’t have to by law.
From a tax perspective, there’s no federal tax deduction when you put money in a Coverdell ESA. However, no income tax is due when you take money out of the account to pay for qualified education expenses (what’s “qualified” for a Coverdell ESA differs slightly than for a 529 plan). Taxes and a 10% penalty are owed if funds are used for other purposes. This is similar to how 529 plan funds are taxed (except there’s usually no state income tax breaks for contributions to a Coverdell ESA).
You can’t put more than $2,000 per year in a Coverdell ESA for a child. However, the limit is gradually reduced – potentially to $0 – if your income is over a certain amount. Plus, contributions to the account generally aren’t allowed once the child turns 18. You typically have more investment options with a Coverdell ESA than with a 529 plan, though.
Money in a Coverdell ESA generally has to be withdrawn by the child/beneficiary’s 30th birthday.
UTMA accounts. Any adult can open a UTMA account for a child. The person who opens the account controls it until the child reaches the age of majority. At that point, the child takes over.
You can take money out of a UTMA account at any time. However, before the child reaches the age of majority, funds withdrawn from the account must be used for the child’s benefit. Once the child takes control of the account, they can be used for anything.
UTMA accounts are taxable accounts. There are no tax breaks when you put money in them, and you owe taxes on any earnings for the year. A certain amount of the earnings are not taxed or taxed at the child’s tax rate. However, under the “kiddie tax” rules, unearned income from investments above that amount are taxed at the parents’ tax rate, which is typically higher.
There are no contribution limits for UTMA accounts. There’s also a wide range of investment options available, including stocks, bonds, mutual funds, ETFs, insurance products, and real estate.
Roth IRAs. Parents (and other adults) can open a custodial Roth IRA for a child of any age. Like traditional IRAs, these are popular retirement savings accounts with a lot of flexibility when it comes to investment options. The person who opens a custodial Roth IRA manages it until the child reaches the age of majority, at which point the child assumes control.
There are no tax breaks when you put money into a Roth IRA. However, money in the account grows tax-free. You can withdraw contributions to the account at any time without paying taxes or penalties. Earnings can be withdrawn tax- and penalty-free once the child is 59½ years old (although penalties can be waived for certain early withdrawals, such as to pay for education expenses or buy a first home).
Contributions to the account are allowed only if the child has earned income – such as wages from a summer job. That’s because total IRA contributions can’t exceed earned income for the year. The annual IRA contribution limit applies as well ($7,500, or $8,600 if you’re at least 50 years old, for the 2026 tax year). For Roth IRAs, the annual limit is gradually phased-out if your income is above a certain amount.
|
Feature |
Trump Account |
529 Plan |
Coverdell ESA |
UTMA Account |
Roth IRA |
|
Reason for Saving |
General Savings/ Retirement |
Education |
Education |
General Savings |
Retirement |
|
Investment Options |
Limited to index funds |
Some options typically available |
More options typically available |
Wide variety of options available |
Wide variety of options available |
|
Tax on Earnings |
Tax-deferred |
Tax-free (if funds are used for qualified expenses) |
Tax-free (if funds are used for qualified expenses) |
Taxable when earned |
Tax-free |
|
Contribution Limit (2026) |
$5,000/yr |
None (total account limit may apply) |
$2,000/yr (subject to phase-out) |
None |
$7,500/yr ($8,600 if you’re 50+) |
|
Earned Income Required |
No |
No |
No |
No |
Yes |
|
Control When Child Is an Adult |
Child |
Parent (or other account holder) |
Depends on account |
Child |
Child |
Frequently asked questions about Trump Accounts
Q1: Should you open a Trump Account for your child?
You should definitely open a Trump Account if your child qualifies for a $1,000 deposit under the U.S. government’s pilot program, your employer will put money into the account, or you otherwise qualify for outside contributions. Don’t turn down free money!
If you’re the only one putting money into the account, consider other saving account options to determine which one fits best with your goals and financial situation.
Learn more about how you can start saving for your child’s future with Trump Accounts.
Q2: Are Trump Accounts better than 529 plans?
Trump Accounts are good for starting a general savings account, especially if your child is eligible for a $1,000 pilot program contribution. However, “Trump Accounts are not intended to replace 529 college savings plans,” says Wallace. That’s because 529 plans may be better if you’re saving for a child’s education.
If your child is born in 2025 through 2028, consider opening both a Trump Account and a 529 account. You’ll get the tax advantages, with no annual contribution limits, that come with 529 plans. Plus, you can get the $1,000 pilot program deposit, and save for non-educational expenses (such as buying a house or retiring).
Discover the tax advantages of saving for your child’s education with a 529 plan.
Q4: How do Trump Accounts differ from traditional IRAs?
Trump Accounts are actually a type of traditional IRA, but there are some important differences. For instance, before the year the child/beneficiary turns 18, Trump Accounts have a different annual contribution limit, there’s no earned income requirement, withdrawals are generally not allowed, $1,000 of “seed money” is allowed for children born from 2025 through 2028, and investments are limited to certain index funds.
Starting the year the child turns 18, there are fewer differences between Trump Accounts and other traditional IRAs – but there are still some. For example, a Trump Account can’t receive contributions through a SEP or SIMPLE IRA plan.
Check out the tax benefits for IRAs, 401(k) plans, and other retirement accounts.
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