The Trump Account is a new type of children’s savings vehicle created under the One Big Beautiful Bill Act and is designed to give every eligible child a meaningful financial head start. New parents and casual readers are paying close attention because these accounts blend long term savings with a straightforward structure that is easy to understand. A parent or guardian opens a dedicated account for a child under age eighteen, the government provides a one-time initial deposit for children born within a specific window, and families may choose to add their own contributions as the child grows. Importantly, parents are not required to add any money at all. An account may be opened, funded only with the government’s seed contribution, and left to grow on its own until the child reaches adulthood.
Opening a Trump Account is expected to feel very similar to opening a 529 plan or a custodial investment account. Financial institutions will administer the accounts and parents will complete an application using the child’s Social Security number. Once the account is established, it remains tied to that child until adulthood. Only one account can exist per beneficiary, which keeps recordkeeping simple and ensures that contributions from different family members all flow to the same place.
Funding is one of the features that makes the Trump Account appealing. The federal government will deposit one thousand dollars into accounts for eligible children born between 2025 and 2028. After that initial deposit, parents, grandparents and others may contribute up to five thousand dollars per year until the child turns eighteen. Contributions use after tax dollars, similar to funding a Roth style account, and the earnings will be taxable once withdrawals begin in adulthood. Employers may also contribute up to two thousand five hundred dollars toward an employee’s child. Those employer contributions fall under the same annual limit and are not taxable income to the employee.
For families with limited budgets, it is perfectly acceptable to open the account solely to receive the government’s contribution and make no additional deposits. The account will still grow over time through investment returns. This option allows every eligible child to benefit from the program even if the family chooses not to fund it further or is unable to allocate additional savings. The long-time horizon from birth to age eighteen gives even a small starting amount the opportunity to grow into something meaningful.
Withdrawals are not permitted while the child is still a minor. The account is intended to grow without interruption and to build a substantial balance over time. When the beneficiary reaches age eighteen, the account transitions to a traditional individual retirement style account. At that point, withdrawals may begin under the same rules that govern standard retirement accounts. Earnings are taxed as ordinary income while the original contributions, having been made with after tax dollars, will not be taxed again.
This structure encourages families to think long term. Consistent contributions can create a significant balance, but even the government seeded amount alone has many years to compound. Because early access is not allowed, the funds cannot be used for short term needs such as education or medical expenses and should be viewed as a future launchpad rather than a source of childhood spending.
The Trump Account does not replace other accounts such as 529 plans or custodial investment accounts. Instead, it complements them by offering another way to support a child’s financial future. Some families will prefer the Trump Account because it promotes general long-term savings without education restrictions. Others may pair it with a 529 plan to cover both educational and future adult needs. Since the rules differ across each option, many parents will benefit from reviewing the choices with a financial or tax advisor.
For new parents, the process will be simple. Confirm eligibility, select a participating financial institution, open the account using the child’s identifying information and decide whether to add contributions of your own or simply allow the government seeded amount to begin growing. Families who want to involve grandparents or other relatives may also invite them to contribute as part of a long-term gifting strategy.
As the program becomes fully operational, new parents should stay informed and consider how a Trump Account could support their child’s future. Whether funded only with the government’s contribution or with ongoing family deposits, the account offers a pathway to build financial stability from the very beginning of life and allows compounding to do much of the work over time.
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Eric S. Degen, CPA Titan Accountancy, LLC
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