Everything You Need To Know About New Trump Accounts for Children

The Internal Revenue Service (IRS) and the Department of the Treasury recently released critical initial guidance regarding a brand-new retirement savings vehicle for children: the Trump Account. This new type of Individual Retirement Account (IRA) was established under the comprehensive Working Families Tax Cuts legislation and aims to help families kickstart long-term savings for their children.

Released under IR-2025-117 (accompanied by Notice 2025-68), this announcement outlines the basic structure, eligibility, contribution limits, and investment rules for these accounts. Here is your SEO-friendly breakdown of this major development for family finances and tax planning.

What Are Trump Accounts?

Trump Accounts are a new category of individual retirement account specifically designed for eligible children. They function similarly to traditional IRAs but have unique contribution rules, eligibility requirements, and investment restrictions tailored toward long-term, index-based growth. The creation of these accounts is a provision of the Working Families Tax Cuts.

The new guidance in Notice 2025-68 provides prospective trustees (like financial institutions) and individuals (like parents and guardians) with a general overview of how these accounts will operate.

Key Features and Rules

Understanding the following details is crucial for families planning to utilize this new savings opportunity.

1. Eligibility and Account Setup

To establish a Trump Account, an election must generally be made by a parent or guardian on behalf of an eligible child who has not yet turned age 18 by the end of the calendar year in which the election is made.

The IRS has posted a draft version of the necessary form, Form 4547, Trump Account Election(s), which will be used to establish the account and enroll the child in the pilot program once the final version is released.

2. $1,000 Pilot Program Contribution

One of the most significant benefits is the government’s direct contribution initiative:

The federal government will make a one-time $1,000 pilot program contribution to the Trump Account of each eligible child.
To qualify for the $1,000, the child must be a U.S. citizen and must have been born on or after January 1, 2025, through December 31, 2028.

3. Contribution Limits and Types

While the $1,000 pilot program is automatic for eligible babies, contributions from other sources are subject to specific limits:

Start Date: Contributions to Trump Accounts cannot be made before July 4, 2026.
Annual Limit (General): Other persons, including parents, guardians, and family members, can contribute up to an aggregate limit of $5,000 per year.

Employer Contributions: Under a special provision (Section 128), an employer can contribute up to $2,500 per year to the employee’s or employee’s dependent’s Trump Account.

This $2,500 counts against the $5,000 annual general limit.

This employer contribution will not count toward the employee’s taxable income—a major tax benefit.
Charitable Contributions: Certain governmental entities and charities may also make qualified general contributions.

4. Investment Requirements

The funds within a Trump Account are subject to specific investment requirements designed to keep the portfolio diversified and focused on the American market:

Funds must be invested in certain mutual funds or exchange-traded funds (ETFs).
These funds or ETFs must track the S&P 500 or another index consisting primarily of American equities.

5. When Can the Money Be Withdrawn?

The accounts are structured for long-term growth and retirement planning:

Amounts generally cannot be withdrawn from the account until January 1st of the calendar year in which the child turns 18 years old.
After the child reaches age 18, the account will generally be treated as a traditional IRA and be subject to the same withdrawal, distribution, and tax rules as other traditional IRAs.

Next Steps for Families and Financial Institutions

The IRS guidance in IR-2025-117 and Notice 2025-68 specifically invites comments from the public on various issues related to Trump Accounts, indicating that the agency is still finalizing the rules and implementation procedures.

If you are a parent or guardian interested in establishing one of these new IRAs for children, you should monitor the IRS website for the final release of Form 4547 and further regulations. Contributions are slated to begin in July 2026.

To stay updated on the latest tax changes, please visit the official IRS website at IRS.gov.