Trump Accounts for Children: New IRA-Style Savings Tool

The “Big Beautiful Bill” created a pilot IRA product for minors, officially opening on July 4. Parents or legal guardians can open an account for any U.S. citizen child under 18 who has a Social Security number. The government deposits a $1,000 seed contribution for children born between January 1 2025 and December 31 2028; eligibility ends for other birth years unless Congress extends the program.

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Christopher Gandy, president of the National Association of Insurance and Financial Advisors, explains that the accounts are a type of Individual Retirement Account (IRA). Each child may receive the $1,000 government deposit, and families can contribute up to $5,000 per year in aggregate—meaning the $5,000 limit applies once per child, not per contributor. Contributions of up to $2,500 per child are not treated as taxable income to the parent. The account remains under the custodian’s control until the child turns 18.

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Elizabeth Hale, an Arizona-based CPA and CEO at eeCPA, notes that the law mandates placement in a low-cost index fund capped at a 0.10 % fee; the Treasury’s default is the SPDR Portfolio S&P 500 ETF. Adam Bergman, founder of IRA Financial, argues that a simple, low-cost option is appropriate for long-term growth. The TrumpAccounts website illustrates that the $1,000 seed could grow to $6,000 by age 18 with no additional contributions, $19,000 with $250 annual additions, and $271,000 if the full $5,000 yearly limit is contributed.

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At age 18, the account can be rolled into a Roth IRA, allowing tax-free growth if withdrawals occur after the child’s lower-tax-bracket years. Ordinary income tax may apply to early withdrawals, and earnings above $2,700 are taxed at the parent’s marginal rate. Compared with 529 college-savings plans, Trump Accounts have a lower annual contribution limit and taxable withdrawals, but they can coexist with a 529 plan for diversified savings.

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• “This is legally a traditional IRA under a new section of the tax code, section 530A. However, you don't get to pick just anything,” — Elizabeth Hale, an Arizona-based CPA and CEO at eeCPA

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• “At the end of those four years, the child could be walking across the graduation stage with a diploma in one hand and $200,000 in a Roth IRA that will never be taxed again.” — Elizabeth Hale, an Arizona-based CPA and CEO at eeCPA

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