Understanding the New Trump Accounts for Children

As your trusted CPA, we want to bring your attention to a new federal initiative that could have a meaningful impact on your family’s long-term financial planning: the Trump Account, introduced under the recently passed One Big Beautiful Bill Act.

This new program is designed to help American children build wealth from birth—and it’s something we believe you should be aware of, especially if you’re a parent, grandparent, or employer.

 What Is a Trump Account?

Starting in 2025, every U.S. citizen child born between January 1, 2025, and December 31, 2028 will automatically receive a $1,000 deposit into a federally managed savings account known as a Trump Account. These accounts are administered by the IRS and are designed to grow over time through investments in low-cost U.S. stock index funds.

Key Details You Should Know

• Eligibility: Any U.S. citizen child under 18 with a valid Social Security Number is eligible.

• Initial Government Contribution: $1,000 at birth.

• Annual Contribution Limits:

  • Parents/guardians: Up to $5,000 (after-tax).

  • Employers: Up to $2,500 (not considered employee income).

• Tax Treatment:

  • Contributions are not tax-deductible, but the account grows tax-deferred.

  • Withdrawals are taxed as ordinary income once the child reaches adulthood.

  • Early withdrawals may incur a 10% penalty, unless used for qualified purposes.

  • At age 18, the account converts into a traditional IRA, and standard IRA rules apply.

When Can the Funds Be Accessed?

Although the account is technically accessible at age 18, it functions similarly to a traditional IRA. Withdrawals before age 59½ are generally penalized unless used for:

• Higher education

• First-time home purchase (up to $10,000)

• Childbirth or adoption expenses (up to $5,000)

• Disability or other qualifying exceptions

How This Affects Your Financial Planning

Here are a few ways we can help you take advantage of this opportunity:

1. Strategic Contributions

While contributions aren’t tax-deductible, they can be a powerful tool for long-term savings. We can help you determine how Trump Accounts fit into your broader financial goals.

2. Gift and Estate Planning

Contributions count toward the annual gift tax exclusion (currently $18,000 per donor per recipient). This makes Trump Accounts a useful vehicle for grandparents or others looking to transfer wealth efficiently.

3. Employer Benefits

If you’re a business owner, consider offering Trump Account contributions as part of your employee benefits package. It’s a family-friendly perk that could also be tax-deductible for your business.

4. Complementing Other Accounts

Trump Accounts can work alongside 529 plans, custodial accounts, and Roth IRAs to create a diversified savings strategy for your child’s future.

Next Steps:

You’ll first be able to open and contribute to a Trump Account for your child once the IRS releases more detailed guidance before the program’s official launch in July 2026.

In the meantime, we recommend:

• Ensuring your child has a Social Security number.

• Planning ahead for annual contributions.

• Scheduling a meeting with us to discuss how this fits into your financial plan.

If you have any questions or would like to explore how Trump Accounts can benefit your family or business, please don’t hesitate to reach out. We’re here to help you make the most of every opportunity.

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Disclaimer: This blog is for informational purposes only and does not constitute legal or tax advice. Please consult with a qualified tax professional for personalized guidance.