Trump Accounts: A Tax-Advantaged Way to Save for Your Child’s Future

If you have children under 18, a new provision of the One Big Beautiful Bill Act (OBBBA) may offer a new way to build long-term wealth on their behalf. Trump accounts are a traditional IRA-style account established by an authorized individual, most commonly a parent, for the exclusive benefit of an eligible child. Although Trump accounts are a type of traditional IRA under tax law, they operate very differently while the child is under age 18.

Beginning July 4, 2026, these accounts may begin receiving contributions, giving families a head start on investing in their children’s future during years when the child does not otherwise qualify for traditional or Roth IRA contributions.

How to Establish a Trump Account

To establish a Trump account and become eligible for the $1,000 pilot program contribution from the federal government, an authorized individual must file an election with the IRS. After submitting the election, the Treasury will create the account and send activation instructions to the authorized individual, at which point the account becomes usable. Only one initial Trump account election can be made per eligible child; subsequent elections will be rejected by the IRS.

Key Planning Considerations and Concepts

Before filing the election, the individual must confirm that he or she qualifies as the authorized individual based on their relationship with the child, as specific ordering rules assign priority when more than one person is eligible.

An authorized individual is the child’s legal guardian, parent, adult sibling, or grandparent, with priority in that specific order. For example, if both a parent and a grandparent wish to elect into a Trump account for the same child, the parent is the authorized individual who must file the election assuming the grandparent is not the child’s legal guardian. For those electing into the pilot program, the authorized person is the individual who anticipates the child will be his or her qualifying child for the tax year in which the election is made.

Unlike traditional and Roth IRAs, contributions to a Trump account are not tied to taxable compensation. Contributions may be made by the child, parents, other individuals, government entities, and employers.

Who Qualifies as an Eligible Child?

To enroll in a Trump account, a child must meet both of the following requirements:

• Be under the age of 18
• Have a valid Social Security Number issued before the election is made

Types of Contributions and Tax Treatment

Contributions to Trump accounts during the growth period are not includible in the child’s income. The growth period spans from the date the election is made through December 31 of the year before the child turns 18. There are five types of contributions, three of which do not create tax basis and will affect the taxable income of future distributions from the account.

Contributions That Do Not Create Tax Basis:

• Pilot program contributions from the U.S. Treasury
• Qualified general contributions
• Employer contributions not includible in the gross income of the employee under Section 128

Contributions That Do Create Tax Basis:

• Qualified rollover contributions (from one Trump account to another Trump account)
• Contributions from other sources, such as the child, parents, or any other person

Contribution Limits and Eligible Investments

Pilot program contributions, qualified general contributions, and qualified rollover contributions are not subject to an annual contribution limit. All other contributions during the growth period are subject to a combined annual limit of $5,000, with cost-of-living adjustments beginning after 2027.

During the growth period, Trump accounts may only invest in “eligible investments,” defined as mutual funds or exchange-traded funds that track an index of primarily U.S. companies and meet certain other requirements.

Pilot Program Contribution for Children Born between 2025 and 2028

A one-time $1,000 pilot program contribution from the U.S. Treasury is available for an eligible child who meets all the following criteria:

• Born between 2025 and 2028
• Is a U.S. citizen
• Has a Social Security Number
• Is anticipated to be the qualifying child of the authorized individual establishing the account
• Has not previously made an election into the pilot program

Distribution Rules: During and After the Growth Period

The tax treatment of distributions depends on whether they occur during or after the growth period.

During the growth period, distributions are permitted only in limited circumstances, including qualified rollover contributions to a Rollover Trump account, certain qualified ABLE rollover contributions, distributions in excess of contributions, and distributions upon the death of the account beneficiary.

After the growth period, distributions generally follow the same rules as traditional IRAs, including contributions, investments, distributions, required minimum distributions, rollovers, Roth conversions, ordinary income taxation, and reporting. One key distinction applies to basis allocation: for Trump accounts, only the value of the Trump account itself is considered when calculating the basis allocable to the distribution, rather than the aggregated value of all IRA accounts used for other IRA types.

Additional IRS guidance is expected, and practical details may evolve as these accounts are implemented. If you have questions about Trump accounts and how they may fit into your family’s financial picture, contact your BMF advisor.