Included within the One Big Beautiful Bill Act (OBBBA) of 2025 is a provision for new Trump Accounts. You may have heard these referred to as “Trump baby savings accounts.” These are long-term savings accounts for minor children that function similarly to a traditional IRA, with some differences until the child turns 18 years old.
We’ll cover common questions below, including how to open a Trump account.
In this article:
- Trump Accounts are long-term, tax-deferred savings accounts for children under 18, created by the One Big Beautiful Bill Act (OBBBA) in July 2025.
- Only parents or guardians can open them, but contributions can come from parents/guardians, relatives, or employers until the child turns 18.
- The accounts have a $5,000 annual contribution limit. Children born between Jan. 1, 2025, and Dec. 31, 2028, also receive a one-time $1,000 federal deposit.
- Accounts cannot be opened or funded until July 4, 2026 at the earliest.
What are Trump Accounts?
Trump Accounts are tax-advantaged long-term savings and investments accounts for children under 18 years old. These were created under the One Big Beautiful Bill Act (OBBBA) passed in July 2025.
Who owns the account?
While parents or guardians are the ones who open and manage the account, the child is considered the account owner, and will take full control of it once they reach age 18.
Who can contribute to the Trump Savings Accounts?
Parents, guardians, relatives, and employers, can contribute to a child’s Trump Account.
While others can contribute, only parents or guardians can actually open the account on behalf of the child. There are no income thresholds requirements for a parent or guardian to open the account. Unlike traditional IRAs, you are also not required to have earned income in order to contribute to the account.
Are Trump Savings Accounts tax-deferred?
Yes! The accounts are tax-deferred, so money grows without being taxed until it’s withdrawn.
Distributions from the account cannot be made until the year that the child turns 18 years old. Once that takes place, the account transitions to traditional IRA rules, with distributions taxed as ordinary income. Premature distributions made prior to age 59 ½ come with additional penalties, with certain exceptions.
Are contributions to the account considered tax deductible?
No, any contributions made to the Trump Account while the child is still a minor is not tax deductible.
Once your child turns 18, this changes. At that point, traditional IRA rules apply, so that any contributions your child makes to their account are tax deductible, with some requirements.
Are there contribution limits?
Unlike a 529 savings plan which does not have a federal contribution limit (only state limits), there are annual contribution limits of $5,000 to a Trump Savings Account. Employers can contribute up to $2,500 for an employee or the employee’s dependent (under the age of 18). Keep in mind the employer’s contribution does count toward the $5,000 annual limit.
Penalties could occur if annual contributions exceed the limit: the IRS may assess a 6% penalty each year until the excess is corrected.
What about the initial deposit from the federal government?
The OBBBA also created a one-time $1,000 deposit from the federal government. However, this initial deposit is not for any account beneficiary; only children born between Jan. 1, 2025, and Dec. 31, 2028 are eligible for these one-time deposits. Additionally, the child must have a Social Security number to receive the deposit. More information is expected to become available in early 2026.
Good news: this $1,000 deposit does not count toward the $5,000 limit.
What happens when your child turns 18 years old?
The year your child turns 18, the Trump Account begins to follow traditional IRA rules.
From that point onward, your child will need eligible compensation in order to contribute to the account. Additionally, only your child will be able to contribute to the account after age 18.
Can you take distributions from a Trump Account?
For children under the age of 18, no distributions are allowed under any circumstances.
This changes once the child turns 18 years old. After that, traditional IRA distribution rules set in. If the beneficiary takes a distribution prior to age 59 ½, a 10% penalty applies. There are certain exceptions to this early distribution rule.
How do you open a Trump Account?
Wondering how to open a Trump account? You’ll have to wait. Accounts cannot be opened nor contributions accepted until July 4, 2026. The IRS has issued some guidance and upcoming regulations on its website. You or your CPA will make an election to open the account by filing Form 4547, which has not yet been released. You can sign up for updates here.
Should I open a Trump Account for my child?
The answer to this depends on your family’s unique financial situation.
For eligible children, the $1,000 federal contribution basically means “free” money to boost your child’s savings. Additionally, if your employer offers contributions as part of your benefits, this could be another reason to take advantage of these new savings accounts.
However, if you are not eligible for these benefits, you’ll want to evaluate whether the Trump account, a 529 plan, or other savings account is the best fit for preparing for your child’s future, unless you have the available resources to take advantage of all savings options.
Plan for your child’s future with Landmark CPAs
Work with Landmark CPAs to make a savings plan for your child based on your unique financial circumstances. Contact us to get started.