What Are Trump Accounts and How Do They Work?

Investing in your children, grandchildren, or minor sibling's future can set them up to have a strong financial foundation once they've reached adulthood. Starting after July 4th 2026, there will be a new kind of tax-deferred investment account for minors born between January 1st, 2025, and December 31st, 2028.

The new government program will be contributing $1,000 into accounts for the qualifying minors.

Here are some of the key details regarding the new tax-deferred 530A account, also known as a "Trump Account."

a young child in a graduation cap and gown


Published: June 5, 2026

The opinions shared in this article are solely those of the advisors at Rockford Financial Planning. All information within is reflective of the article's publishing date.

This content is not intended as investment, legal, or tax advice. Historical performance and economic data are for informational purposes only and do not predict future results. Consult with a qualified legal or financial professional before acting on any financial information found here.


Who qualifies for Trump Account contributions?

This pilot-program is currently available to U.S. Citizens who:

  • Have a Social Security Number, and
  • Were born between January 1st, 2025 and December 31st, 2028.

There is a one account limit per child.

Unlike a typical IRA, these accounts can be funded without any requirements or restrictions on qualifying income.


How to open a Trump Account?

There is a strict priority order for who may apply on behalf of the child:

  1. Legal guardians
  2. Parents (only if no other legal guardian exists)
  3. Adult siblings (only if no parent exists)
  4. Grandparents (only if none of the above are available)

This hierarchy is binding, therefore a parent cannot apply if a legal guardian exists, an adult sibling cannot apply if a parent exists, and grandparents can only apply when no higher-priority individual is available.

All accounts will initially be opened at BNY and Robinhood. After opening, the account may be fully transferred to another institution that supports Trump Accounts. Partial rollovers are not permitted, and only one account per child may be open at any given time.

Rollover Rules

Trump Accounts may be rolled over from BNY and Robinhood into other custodians that support them. It is important to note that:

    1. No partial rollovers are allowed. The accounts must be fully rolled over.
    2. Only one Trump Account can be open at a time per beneficiary.
    3. For disabled beneficiaries, the account may be rolled over in its entirety to a 529A ABLE account, and only during the year the beneficiary turns 17


    530A accounts ("Trump Accounts") can be opened by filing Form 4547 with the IRS.

    Applications can be filed online via this portal. (https://form.trumpaccounts.gov/)

    A PDF version of the form can be found on the IRS' website. (https://www.irs.gov/forms-pubs/about-form-4547)

    The Pilot Program: $1,000 Government Contribution

    As part of the pilot program, the government is contributing $1,000 to accounts for eligible U.S. citizens born between 2025 and 2028. Key details:

    • This must be actively elected. The $1,000 contribution does not happen automatically
    • The $1,000 does not count against the $5,000 annual contribution limit
    • It is excluded from income
    • It is currently unknown whether this contribution will continue after the pilot program ends

    The government has not yet provided an exact date or general timeline after 530A account ("Trump Account") openings pertaining to when the $1,000 contribution will be made. However, the accounts are available after July 4, 2026, and it is expected that more information regarding the contributions will be made available closer to that date. 

    We will update this article once more info is available.


    The Pilot Program: $1,000 Government Contribution

    As part of the pilot program, the government is contributing $1,000 to accounts for eligible U.S. citizens born between 2025 and 2028. Key details:

    1. This must be actively elected. The $1,000 contribution does not happen automatically
    2. The $1,000 does not count against the $5,000 annual contribution limit
    3. It is excluded from income
    4. It is currently unknown whether this contribution will continue after the pilot program ends

    The government has not yet provided an exact date or general timeline after 530A account ("Trump Account") openings pertaining to when the $1,000 contribution will be made. However, the accounts are available after July 4, 2026, and it is expected that more information regarding the contributions will be made available closer to that date.

    We will update this post once more info is available.


    Annual Contribution Rules

    The 530A account has an annual contribution limit of $5,000, which will be indexed to inflation beginning in 2027. 

    Notable distinctions from traditional IRAs:

    • Anyone can contribute to the accounts, not just parents or guardians of the child
    • The contribution deadline is December 31, unlike the April 15 deadline for IRAs and HSAs
    • There is no earned income requirement

    Employer Contributions

    Employers may contribute up to $2,500 per employee (also indexed to inflation after 2027). Important nuances:

    • This is a per employee limit and not a per dependent, child, or account limit
    • Employer contributions count toward the $5,000 annual direct contribution limit
    • They are excluded from federal taxable income; state treatment may vary
    • Non-discrimination rules apply: only businesses with non-highly compensated employees may make employer contributions to these accounts

    Gift Tax Considerations

    Contributions made on behalf of a child could potentially trigger Form 709 filing requirements as the child cannot access the funds until age 18 this could be considered gifts of future interests, not present interests. This would reduce the contributor's lifetime gift tax exemption.


    Eligible Investments

    During the "growth period" (prior to the account converting to a standard IRA when the child turns 18), investments are restricted to:

      1. Market cap indexes are permitted (e.g., small-cap indexes)
      2. Specific sector funds (e.g., technology-only) are not allowed
      3. No inverse or leveraged funds
      4. Funds must carry annual expense ratios of no more than 0.10% (10 basis points)

      These investment restrictions apply only during the growth period. Once the account converts to a traditional IRA, standard IRA investment rules apply.


      The Growth Period and What Happens After

      During the growth period, the account operates under specific investment and contribution rules. Starting January 1 of the year the child turns 18, the account continues to exist as a 530A account, but:

      • It is treated like a traditional IRA for contribution and distribution purposes
      • The basis in this account is tracked separately from any other IRAs the owner holds
      • No SEP or SIMPLE contributions may be made into it
      • Standard IRA investment rules now apply (no longer restricted to US equity index funds)


      The owner may choose to roll the Trump Account into a traditional IRA at any point after the growth period ends:

      • Once rolled over, standard IRA rules apply in full
      • The basis merges with the owner's other traditional IRA basis for pro-rata purposes (relevant for backdoor Roth planning)
      • Some custodians may require this rollover rather than maintaining the account as a post-growth Trump Account

      After the growth period, the account may be converted to a Roth IRA at any time. The owner or beneficiary would owe tax on the non-basis portion of the conversion. Kiddie tax rules apply and are worth understanding.

      When converting to a Roth:

      1. The first $1,350 is generally tax-free
      2. The next $1,350 is taxed at the child's rate
      3. The remainder is taxed at the parent's rate

      Kiddie tax rules apply to:

      • All children under age 18 at year-end
      • 18-year-olds with earned income less than half of their support
      • Full-time students aged 19-24 with earned income less than half of their support

      If the beneficiary passes away during the growth period, the entire fair market value of the account becomes taxable to the inheriting beneficiary or the beneficiary's estate. After the growth period, standard inherited IRA rules apply.



      State Tax Considerations

      While employer contributions and account earnings are generally excluded from federal taxable income, seven states are currently planning to tax annual earnings in Trump Accounts as ordinary income:

      1. California
      2. Hawaii
      3. Kentucky
      4. Massachusetts
      5. Pennsylvania
      6. South Carolina
      7. Wisconsin

      These states may also tax employer contributions. Residents of these states may find it worthwhile to factor this into their overall planning.


      Can a Trump Account be used for education expenses?

      530A accounts are structured as tax-deferred retirement accounts. Starting January 1 of the year the child turns 18, the account is treated as a traditional IRA.

      Students may be able to make penalty-free tuition withdrawals. If attending more than half-time, this can potentially include room and board and books as well.

      Will this impact how the student qualifies for Financial Aid?

      Based on current financial planning analysis, these accounts are likely to be treated as retirement accounts for FAFSA purposes -- meaning they would generally not be counted as a student asset on the FAFSA. However, any distributions taken from the account would be reported as income and could affect the following year's financial aid eligibility. This is an important distinction worth reviewing with a financial aid advisor.

      It's important to verify the eligibility of the student's institution before making withdrawals. Other accounts that are designed for educational savings may be a better tool to utilize. Click here to read our post on education savings accounts. 


      How to integrate with your full financial picture?

      Every financial plan is different, and what role a Trump Account plays, if any, can depend heavily on the intended purpose. Is the goal to build retirement savings for a child? Fund future education costs? Establish a longer-term wealth transfer strategy? These accounts are primarily structured as IRA vehicles, and that distinction shapes nearly every planning consideration around them. While this article serves as a general guideline for considerations on utilizing Trump Accounts, it does not serve as a definitive course of action to navigate saving for your child's future. Reaching out to a professional may be an insightful avenue toward achieving your goals and addressing your concerns.

      At Rockford Financial Planning, we help our clients navigate these considerations by helping clients align their unique needs and long-term values with their future.

      Reach out to us to schedule a free call to figure out saving for your child's future or any of your other financial needs.


      Read more:

      Below are some resources you may find insightful for further reading on this topic.

      1. Trump Accounts give the next generation a heads up on savings.
        https://www.irs.gov/trumpaccounts
      2. Treasury, IRS issue guidance on Trump Accounts established under the Working Families Tax Cuts; notice announces upcoming regulations.
        https://www.irs.gov/newsroom/treasury-irs-issue-guidance-on-trump-accounts-established-under-the-working-families-tax-cuts-notice-announces-upcoming-regulations
      3. Notice 2025-68
        https://www.irs.gov/pub/irs-drop/n-25-68.pdf
      4. Trump Accounts official website
        https://trumpaccounts.gov
      5. Exceptions to tax on early distributions
        https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-exceptions-to-tax-on-early-distributions
      6. Topic no. 553, Tax on a child's investment and other unearned income (kiddie tax)
        https://www.irs.gov/taxtopics/tc553