Trump Accounts for Children Offer a Headstart for Retirement
Trump Accounts for children are a new type of retirement account created under the One Big Beautiful Bill Act (OBBBA). This week the IRS released some information about the accounts that will start accepting contributions in July 2026.
What Are Trump Accounts for Children?
Congress created Trump Accounts for children to give a jumpstart to saving for retirement early in life. An authorized person (such as a parent or guardian) makes an election for a qualifying child under the age of 18. After the election is filed, the Treasury creates the initial Trump account for the child.
There is a $5,000 annual cap on contributions, adjusted for inflation. Almost anyone can make contributions, including parents and grandparents, up to the $5,000 limit. The accounts have investment restrictions, mostly requiring contributors to invest in index funds or ETFs.
In addition, employers can make annual contributions up to $2,500 to an employee’s or the employee’s dependent’s Trump account. The employer contribution will count toward the $5,000 limit each year. But the IRS will not consider the contribution taxable income for the employee.
If anyone other than an employer, government entity or charity makes a contribution, it will be with after-tax dollars – in other words, there’s no tax deduction. Once the child turns 18, the Trump Account is pretty much subject to the same rules as a traditional IRA.
Jumpstarting the Jumpstart of Trump Accounts for Children
To help get things started, the government will make a $1,000 contribution to the Trump Accounts for children born between January 1, 2025 and December 31, 2028. That contribution will not count toward the $5,000 annual limit.
And due to $6.25 billion in funding from private citizens Michael and Susan Dell, the first 25 million children under the age of 10 who start accounts will receive an additional contribution of $250 each. Children must live in a zip code with a median annual income of $150,000 to be eligible for the $250 contribution.
How Do You Get Started?
The IRS is still in the process of finalizing forms and procedures for the program. Taxpayers will file Form 4547 (once it is finalized) with their personal Form 1040 tax return to make the election for a Trump Account. Once the Department of the Treasury establishes the account, contributions can start on July 4, 2026.
Links
Follow these links for the IRS notice offering guidance on Trump Accounts and for a draft of Form 4547.
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