Trump Accounts for Kids’ Retirement Savings

Trump accounts are a type of federally facilitated traditional individual retirement account (IRA) established for the exclusive benefit of an eligible minor individual, with special rules that do not apply to other IRA arrangements and that primarily apply before the account beneficiary turns 18.  The recently enacted One Big Beautiful Bill (OBBB) established the Trump accounts for taxable year beginning after December 31, 2025, but contributions to them may not be accepted before July 4, 2026. 

There are no income or means testing limitations on the child’s family, so eligibility is universal for minors who meet the requirements.

A Trump Account is one of several different accounts that can help you save for a child’s future.  If your goal is creating tax-free retirement savings for a young adult, you may choose to establish a Trump account.

Pilot Program

• Under a companion Contribution Pilot Program (“pilot program”), and authorized individual may elect to have the Treasury Secretary make a one-time $1,000 government contribution to the Trump account of an eligible child, who is a U.S. citizen born in 2025, 2026, 2027, or 2028, is the authorized individual’s qualifying child under IRC § 152 (c) for the tax year in which the election is made, to whom a Social Security number has been issued, and for whom no prior pilot program election has been made. 
• The pilot program contribution of $1,000 payment effectively seeds the account without any family cost-sharing or matching requirement, or tax consequences to the account beneficiary or the authorized individual electing to open the initial Trump Account.

Eligibility and Establishment Requirements

• A Trump account’s eligible individual is someone who has not attained age 18 before the end of the calendar year in which the election to open a Trump account is made, has been issued a social security number before the election, and for whom an election is made to establish the account.
• An election to open an initial Trump account for an eligible individual could be made by an individual or by the Treasury Secretary.
• If an account is established at the same time as an election for a pilot program contribution, the person authorized to make the pilot program election is also the authorized individual for opening and managing the initial Trump account.
• If no pilot program contribution is claimed, the authority to open and manage the Trump accounts is governed by a strict hierarchy of individuals consisting of (1) legal guardian, (2) parent, (3) adult sibling, or (4) grandparent.
• The initial Trump account must be created or organized by the Secretary of the Treasury for the exclusive benefit of the eligible individual. On April 6, 2026, the U.S. Department of the Treasury announced that it has designated The Bank of New York Mellon Corporation (“BNY”) as a financial agent of the U.S. government to support implementation of the new Trump Accounts program.  BNY will manage the initial accounts and help develop the new Trump Accounts app, which will be a secure, user-friendly platform that will enable families to easily access and manage their accounts.
• After the initial account is established and during the growth period, a qualified rollover contribution may occur, which is the transfer by the trustee of an existing Trump account of its entire balance to a rollover Trump account.  
• An existing IRA cannot be amended to become a Trump Account because the account must be designated as a Trump Account at the time of establishment.

Contributions

• During the growth period, contributions can be made by governments, nonprofits, employers, qualified rollovers, and other sources (such as the account beneficiary, parents, or any other person) to the Trump account, even if the account beneficiary has not earned income.
• No deduction is allowed for any contribution to a Trump account, regardless of the source of the contribution.
• Contributions made to a Trump account are excluded from the account beneficiary’s gross income and do not have tax consequences for the account beneficiary or the authorized individual electing to open the initial Trump Account.
• The annual contribution limit for individual contributions is $5,000 (indexed for inflation after 2027). 
• Employers may set up a Trump account contribution program to make contributions to the Trump accounts of employees or their dependents.  Employer contributions are excluded from the employee’s income and are limited to $2,500 per year (adjusted for inflation after 2027) per employee, not per child, and thus, does not increase if the employee has multiple children with Trump accounts.  An account initially established as a Trump account can never receive contributions under an IRC § 408(k) SEP arrangement or IRC § 408(p) SIMPLE IRA plan.  The employer contributions count toward the Trump account $5,000 annual contribution limit.  The exclusion from gross income for the employee reduces the base on which payroll taxes are calculated, thereby reducing the employer’s payroll tax liability.

• 501(c)(3) organizations and other entities, including potentially government bodies, can make “qualified general contributions” to the accounts through the Treasury Department, though rules governing those contributions are still developing. 
• Qualified rollover contributions, qualified general contributions, and pilot program contributions do not count toward this $5,000 annual contribution limit.
• Pilot program contributions, qualified general contributions, and employer contributions do not create basis in a Trump account.  Contributions from other sources during the growth period create basis in the Trump account.  Qualified rollovers carry over any basis attributable to the funds being transferred from the initial Trump account. 

Investments

• During the growth period, funds must be invested only in eligible investments, defined as mutual funds or ETFs tracking a broad index of primarily U.S. companies, without leverage, and with annual fees and expenses not exceeding 0.1%.

Distributions and Rollovers

• Distributions are generally not permitted during the growth period, except for qualified rollover contributions, qualified Achieving a Better Life Experience (ABLE) rollover contributions (in the year the disabled minor beneficiary turns 17), distributions of excess contributions, and distributions upon death of the account beneficiary.
• During the growth period, hardship distributions are not permitted from a Trump account, and the trustee of a Trump account may not close it and distribute the account funds to the account beneficiary.
• After the growth period, the rules for traditional IRAs under IRC § 408 generally apply to the initially established Trump Account, except that it can never receive contributions under an IRC § 408(k) SEP arrangement or IRC § 408(p) SIMPLE IRA plan.

Reporting and Administration

• Trustees must report contributions, distributions, fair market value, basis, and other required information to the IRS and the beneficiary.
• Special reporting rules apply during the growth period, and trustees must have procedures to prevent excess contributions.

Steps to Make Trump Account and/or Pilot Program Election

• All elections can be made by an authorized individual on a separately filed Form 4547 (Trump Account Election(s)), or on a Form 4547 filed in conjunction with (but separate from) the filing of an income tax return, or on the official online portal at https://trumpaccounts.gov/.  The initial Trump account election, however, is not a part of any individual’s tax return and is independent of the filing of the income tax return.
• Form 4547 is used to open the initial account and, for eligible children, to elect the $1,000 federal pilot program contribution.  
• If Form 4547 is used and is submitted electronically through a tax professional (Electronic Return Originator or ERO), Form 8879-TA (IRS e-file Signature Authorization for Form 4547, Trump Account Election(s)), also must be completed.  A signed Form 8879-TA must be kept on file by the tax professional.
• If a Trump account was established in a prior filing, Form 4547 may be submitted solely to elect the pilot program contribution without reestablishing the account.  

If you have any questions regarding Trump accounts, please contact your MSPC advisor.