One of the many provisions of H.R. 1 (aka, One Big Beautiful Bill Act), which was signed into law by the President in July of last year, is a federally funded stock market indexed investment account for children born between 2025 and 2028.

Funded to the tune of $14.4 billion, these account, which are also known as Trump accounts, were recently back in the news, when Michael and Susan Dell announced a pledge to seed millions of these and other accounts with a private contribution of $6.25 billion.

Taken together, children born between ’25 and ’28 will receive $1,000 in their accounts from the federal government, and $250 from the Dell’s contribution. In addition, the Dell’s pledge accounts for $250 for about 25 million other children born in 2014 – 2024 who live in zip codes where the median household income is $150,000 or less.

Graphic for Trump Account

The objective of these accounts is to provide every qualifying U.S. child with a financial head start / a starter fund that can grow through investments in public stock markets to finance future life goals when these children become adults. That can include pursuing a college education or specialized training, buying a first home, or even using the funds to start a business.

In this post, we shed light on what Trump accounts are and aren’t, how they work, and what to expect.

According to the Council of Economic Advisers (an agency that resides within the Executive Office of the President), a Trump account started for a baby born in 2026 could grow to more than $300,000 by the time that child turns 18 (assuming maximum contributions and average U.S. stock market returns), and more than $1.9 million by age 28 given the same.

What Trump Accounts Are (and Aren’t)

A Trump account is a tax-advantaged investment account established on behalf of a child (under 18) similar in structure to an Individual Retirement Account (IRA). Think of them as a tax-advantaged complementary savings account for children.

They are not like a 529 plan, which is a tax-advantaged plan specifically for education that often offers tax-free withdrawals when used specifically for qualified educational expenses. Distributions from Trump accounts may be used for purposes other than education, such as buying a first home or starting a business. They’re also not a spending account or a trust fund that can be accessed at any time; early withdrawals are restricted and regulated. Nor are they a substitute for other savings/retirement tools.

How Trump Accounts Work: Eligibility, Contributions, and Distributions

Here’s how Trump accounts work (for more details, please see IRS Notice 2025-68 (PDF)):

  • Any U.S. citizen who is a child under the age of 18 with a Social Security number is eligible. When the Trump account is opened, the eligible individual becomes the owner of the Trump account and is referred to as the “account beneficiary.”
  • Only the eligible individual’s legal guardian, parent, adult sibling, or grandparent (in that order of priority) is authorized to create a Trump account for the eligible individual. Only one of these authorized individuals can do so by making the election on IRS Form 4547 or through an online tool or application on gov. (Note that neither Form 4547 nor the aforementioned online tools are available as of the writing of this post.)
  • A Trump account is subject to special rules that don’t apply to other IRAs. (Individual Retirement Account). Most of these rules pertain only to the account’s growth period — from when the account is created to Dec. 31 of the year before the child turns 18. Rules that apply during the growth period include the following:
    • Funds must be invested only in eligible investments — generally, a low-fee mutual fund or exchange traded fund (ETF) that tracks a broad index of primarily U.S. companies, such as the Standard and Poor’s 500 (S&P 500).
    • The account has a contribution limit separate from other IRA arrangements.
    • Distributions are generally prohibited during the growth period.
    • Contributions to Trump accounts are not tax deductible.
  • For children born between Jan. 1, 2025 and Dec. 31, 2028, the government will seed the account with a one-time “pilot program” contribution of $1,000. Taxpayers can make an election on behalf of their eligible child to have $1,000 treated as a tax payment. The $1,000 will be deposited into a Trump account established on behalf of the child.
  • A Trump account may be established at the same time as an election is made to receive a pilot program contribution or at any other time before Jan. 1 of the calendar year in which the beneficiary attains the age of 18.
  • The Dells’ $6.25 billion is planned to seed the accounts of roughly 25 million children under the age of 10 who were born before 2025 (and thus aren’t eligible for the $1,000 government contribution) with $250 per account. Any remaining money could go to older children. To be eligible, children must live in specific zip codes where the median household income is below $150,000. Children may receive additional deposits from employers or other philanthropic contributors.
  • Parents, relatives, and other taxable entities as well as nonprofit and government entities, and employers may contribute to a child’s account. Total annual contributions cannot exceed $5,000 per child per year (adjusted for inflation beginning with the 2028 taxable year).
  • Individual contributions can be made to an account starting July 4, 2026 (12 months from the date H.R. 1 was enacted). These contributions do not count against the contribution limit of any other IRA account.
  • Employer contributions are limited to $2,500 per child per year (subject to cost-of-living adjustments after 2027) and are not reported as employee income. Note that employer contributions count toward the $5,000 per child per year contribution cap.
  • The investment grows tax deferred. At the end of the growth period, the Trump account may be rolled over to an individual retirement arrangement or other eligible retirement plan for the benefit of the Trump account beneficiary.
  • Distributions will be taxed like those from any other IRA. Because the contributions made by parents and other relatives are made after-tax, these contributions would not be subject to tax when withdrawn (to avoid double-taxation). However, the following contributions will be taxable when withdrawn:
    • Any qualified general contributions: essentially payments made by a federal, state, or local government or 501(c)(3) organization to a qualified class of beneficiaries
    • The $1,000 seed contribution from the government’s pilot program
    • Untaxed contributions from employers

Deciding Whether a Trump Account Is Best for Your Situation

Trump accounts may not be the smartest choice for all taxpayers. Because contributions are not tax-deductible and earnings are subject to tax, other options, such as contributing to a 529 account or a Roth IRA may be the wiser choice. Consider the following:

  • If the child is eligible to receive any contributions to a Trump account from the federal government, the Dells, or anyone else (for example, your employer or the child’s employer), open a Trump account for the child so they can receive the free money and watch it grow.
  • If you’re saving specifically to finance a college education, contributing to a 529 account may be the better choice, because all distributions used to pay eligible education expenses are tax-free.
  • If the child has earned income, contributing to a Roth IRA may be more advantageous because all distributions are tax-free after the child reaches the age of 59 1/2.
  • If you or your child is at a point of maxing out your contributions to a traditional IRA, Roth IRA, 529 account, or other tax-advantaged account, a Trump account can provide you with another tax-smart option for helping a child save for the future.
  • If you want the child to have access to their money before age 18, you want them to avoid having to pay ordinary income tax rates when they eventually access the funds, or you want to avoid the investment restrictions on Trump accounts, a Uniform Transfers to Minors Act (UTMA) account may be the better choice.

Here at SWC, we understand that tax-saving and wealth-building go hand in hand. Sometimes, a wealth-building tool like a Trump account may not be the best option for reducing your tax burden. We can help you construct a comprehensive tax plan that helps you minimize your taxes while maximizing your wealth. Contact us to schedule a consultation.

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Disclaimer: The information in this SWC blog post about Trump accounts is provided for general informational purposes only and may not reflect current financial thinking or practices. No information contained in this blog post should be construed as tax or financial management advice from the staff at SWC (Stees, Walker & Company, LLP), nor is this the information contained in this blog post intended to be a substitute for tax planning and financial counsel on any subject matter or intended to take the place of hiring a Certified Public Accountant in your jurisdiction. No reader of this blog post should act or refrain from acting on the basis of any information included in, or accessible through, this blog post without seeking the appropriate tax and financial planning advice on the particular facts and circumstances at issue from a licensed professional in the recipient’s state, country or other appropriate licensing jurisdiction.