Have a child or grandchild under 18? What Trump Accounts are, how to claim the free $1,000, and how the money is taxed.
Written for parents and grandparents who want the basics of the new children’s savings accounts, without the jargon.
The short answer
Trump Accounts opened on July 4, 2026. They are long-term investment accounts for children, and the government will put $1,000 into the account of any eligible child born from 2025 through 2028. You only have to sign up and ask for it.
The deposit isn’t automatic. A parent or other authorized adult has to file IRS Form 4547 and check the box requesting it, then activate the account.
What is a Trump Account?
A Trump Account is a savings account for a child, created by the One Big Beautiful Bill Act signed in July 2025. In the tax code it’s called a Section 530A account.
Think of it as a starter retirement account. Money goes in while the child is young, it’s invested in low-cost U.S. stock index funds, and it grows without yearly tax until adulthood. Unlike an IRA, the child doesn’t need a job to have one.
Who qualifies for the $1,000?
The government deposit is a four-year pilot program. A child qualifies when all of these are true:
- Born between January 1, 2025 and December 31, 2028
- A U.S. citizen
- Has a valid Social Security number
- An authorized adult files Form 4547 and requests the $1,000
Children born before 2025 can still have a Trump Account. They just don’t get the $1,000. Any child under 18 with a Social Security number gets the same savings and tax benefits.
How to open an account
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File IRS Form 4547
Do it online through your IRS account at IRS.gov/trumpaccounts, through the official site at trumpaccounts.gov, or with your tax return.
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Watch for the activation notice
After the IRS processes the election, you’ll receive instructions for activating the account.
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Activate the account
Complete the identity verification steps. Once the account is active, eligible children receive the $1,000 and family contributions can begin.
There’s no hard deadline, and the July 4 launch wasn’t a cutoff. Still, we recommend acting soon, especially for children born in 2025 or 2026.
One account per child, and official sites only. The first authorized person to file locks in the account, so agree as a family on who will file. Look-alike websites have appeared; type the official address yourself rather than clicking links in emails or ads.
Who can contribute, and how much?
a year, combined
counts toward $5,000
Parents, grandparents, other relatives and friends can all contribute, but everyone shares one $5,000 yearly limit per child. Some employers contribute up to $2,500 a year to an employee’s child’s account, tax-free to the employee, and that money counts toward the same $5,000. If you’re employed, it’s worth asking HR whether your company offers this.
The government’s $1,000, and certain contributions from charities or state and local programs, don’t count toward the limit. Contributions stop in the year the child turns 18.
Good news on gift taxes. In June 2026, the IRS issued relief (Revenue Procedure 2026-25). Most people who contribute won’t need to file a gift tax return, as long as their total gifts to that child for the year, including the Trump Account contribution, stay within the annual exclusion ($19,000 for 2026). If you make larger gifts or already file gift tax returns, talk with us first.
What it could grow to
Here’s what an account might be worth at 18 under three contribution levels.
About $4,000
No family contributions. The free deposit grows on its own.
About $41,000
A modest yearly contribution adds up over 18 years.
About $191,000
Contributing the maximum every year.
Hypothetical example assuming an 8% average annual return, compounded yearly over 18 years, before taxes. Actual returns will vary and could be lower.
How is the account taxed?
The most common misunderstanding is that Trump Accounts are tax-free, like a Roth IRA. They aren’t. They’re tax-deferred: no tax while the money grows, but withdrawals are generally taxed as ordinary income later. How much is taxed depends on where the money came from.
| Where the money came from | Taxed when withdrawn? |
|---|---|
| $1,000 government deposit | Yes, fully taxable |
| Employer contributions | Yes, fully taxable |
| Charity or government program contributions | Yes, fully taxable |
| Family contributions | The amount you put in comes back tax-free; the growth on it is taxable |
Family contributions aren’t tax-deductible. Because you’ve already paid tax on that money, your child shouldn’t pay tax on it again. That only works if there are good records.
Start a simple log now. For every contribution, note the date, the amount and who made it, and keep the statements. These records could save your child real money down the road.
What happens at 18?
- Birth to 17Contributions go in and the account grows with no yearly tax.
- The year the child turns 18The account starts following traditional IRA rules and the young adult takes control. No one is forced to withdraw.
- Before age 59½Withdrawals are taxed and may face a 10% penalty. The penalty is waived for some uses, such as college costs, a first home (up to $10,000), or the birth or adoption of a child.
A planning opportunity: the Roth conversion
Many 18-year-olds have little income, so converting the account to a Roth IRA may cost only a modest tax bill. From then on, growth and qualified retirement withdrawals can be completely tax-free. It’s years away for most families, but the records you keep now will shape how well it works. We’ll help you model it when the time comes.
How does it compare to a 529 plan?
A Trump Account works best alongside a 529 college savings plan, not instead of one.
| Trump Account | 529 Plan | Custodial Roth IRA | |
|---|---|---|---|
| Free government deposit | $1,000 if eligible | None | None |
| Child needs a job? | No | No | Yes |
| Taxes on withdrawal | Taxed as income, except your original family contributions | Tax-free for qualified education | Tax-free in retirement if rules are met |
| Best for | Long-term savings with flexible use | College and education costs | Teens with earned income |
Fund the 529 first, since its withdrawals for school are tax-free. Add a Trump Account for flexible savings.
A Trump Account adds another tax-deferred account with more freedom in how the money is used later.
Your checklist
- File Form 4547 for a child born 2025 or later
- Check the box to request the $1,000
- Agree on who in the family will file
- Activate the account when notified
- Ask your employer about contributions
- Start a contribution log
- Check with us before large family gifts
- Use only official government sites
Some rules are still being finalized. The IRS hasn’t settled every detail, including how these accounts affect college financial aid and how some states will tax them. We’re following the guidance closely and will update clients as it develops.
Have a child or grandchild under 18?
We’ll help you claim the $1,000, coordinate the account with your 529 and other savings, and keep the records your child will need later.
Or call 516-261-2171
Sources
- IRS: Trump Accounts
- IRS: Instructions for Form 4547, Trump Account election
- TrumpAccounts.gov: official site
This article is for general educational purposes and is not individual tax, legal, or investment advice. Rules for Trump Accounts are new and IRS guidance is still developing. Growth figures are hypothetical and assume an 8% average annual return over 18 years, before taxes.