What Parents Need to Know About Trump Accounts

The IRS and Treasury Department have released initial guidance on a new type of tax-advantaged savings account for children called Trump Accounts. These accounts were created under the Working Families Tax Cuts portion of the One Big Beautiful Bill Act. They’re designed to help families build long-term savings for their children’s future while offering tax-deferred growth, similar to an individual retirement account (IRA).

What Is a Trump Account?

Trump Accounts are individual retirement-style investment accounts that can be established for U.S. citizen children who are under age 18 by the end of the calendar year in which the election is made. Funds grow tax-deferred and generally cannot be withdrawn until the beneficiary turns 18.

These accounts are intended to give families a head start on savings, with a government seed contribution and opportunities for additional contributions from family members, employers, and others.

Key Features Your Clients Should Know

1. Government Seed Contribution

• Each eligible child born on or after January 1, 2025, and through December 31, 2028, may receive a one-time $1,000 federal contribution when a Trump Account is elected.

2. Contribution Limits

• After the initial seed, other contributions from parents, guardians, friends, or relatives are allowed up to a total of $5,000 per year.

• Employers can contribute up to $2,500 per year to an employee’s account or a family member’s account as part of an employer program, which counts toward the $5,000 annual limit.

3. Investment Rules

• Funds must be invested in certain mutual funds or exchange-traded funds that track the S&P 500 or a similar broad U.S. equity index.

4. Withdrawals and Taxes

• Generally, withdrawals are not permitted before the year the child turns 18.

• After age 18, the account is treated much like a traditional IRA, with similar withdrawal rules and tax treatment.

5. Establishment Date

• Contributions can’t begin until July 4, 2026.

Step-By-Step Guide to Setting Up Trump Accounts for Your Children

Here’s what parents and guardians should do to take advantage of this new program:

Step 1: Determine Eligibility

Make sure your child is eligible:

• Must be a U.S. citizen with a valid Social Security number.

• Must be under age 18 by the end of the calendar year in which the Trump Account election is made.

Step 2: Watch for IRS Form 4547

The IRS has posted a draft version of Form 4547 (Trump Account Election) which will be used to establish an account and enroll in the pilot program. You’ll need this form once the final version is released.

Step 3: Complete the Election Form

When the final Form 4547 is available:

• Complete the form on behalf of your eligible child.

• Include required identifying information like your child’s name, date of birth, and Social Security number.

Submit the completed form according to IRS instructions (likely with your 2026 tax return or through a designated IRS portal once announced).

Step 4: Confirm Government Seed Funding

After submitting the election, check that the account has been established and that the $1,000 federal seed contribution is credited to the account for each eligible child.

Step 5: Plan Additional Contributions

Once the account is set up (starting July 4, 2026):

• Decide how much your family will contribute (up to the $5,000 annual limit).

• Coordinate with employers if they offer a contribution program.

Keep clear records of all contributions and documentation because IRS reporting and tracking requirements will apply.

Step 6: Manage and Invest Wisely

Since these accounts are generally invested in index-tracking funds:

• Choose funds that match your long-term strategy.

• Understand that early withdrawals aren’t permitted and penalties may apply if rules aren’t followed.

Final Thoughts

**PLEASE NOTE: Trump Accounts are still new, and IRS guidance is evolving.**

Your best bet is to plan ahead, gather your documentation early, and look for the final version of Form 4547 when it’s released. Once live, this program can be a powerful way for families to grow savings for a child’s future in a tax-advantaged way.

If you have questions or want help setting up Trump Accounts or planning contributions, contact Kamish and Associates. We can walk you through every step and make sure your family takes full advantage of what’s available.