The new Trump Account program has generated a lot of interest among parents and grandparents looking for ways to save for their children’s future. One of the most common questions we hear is:
“My child is under 18 but was born before 2025. Are they eligible?”
The answer is yes, but with an important limitation.
Who Receives the $1,000 Government Contribution?
The federal government provides a $1,000 seed contribution only for eligible U.S. citizen children who are born between January 1, 2025, and December 31, 2028 and meet the program’s eligibility requirements.
If your child was born before January 1, 2025, they do not qualify for the $1,000 government contribution.
That doesn’t mean they are excluded from the program.
Can Children Born Before 2025 Still Have a Trump Account?
Yes.
Children who are under age 18 and meet the program’s eligibility requirements can still have a Trump Account opened for them. Parents, grandparents, other family members, and in some cases employers can make contributions to the account, subject to the annual contribution limits established by law.
The main difference is that families of children born before 2025 must fund the account themselves because there is no federal seed deposit.
Are Contributions Tax Deductible?
This is another common misconception.
No. Contributions to a Trump Account are not deductible for federal income tax purposes.
Contributions are made with after-tax dollars.
The tax benefit comes from tax-deferred investment growth, meaning earnings are generally not taxed while they remain in the account.
This differs from accounts that offer an immediate tax deduction, such as certain retirement plan contributions or Health Savings Accounts.
How Does a Trump Account Compare to Other Savings Options?
Many parents wonder whether they should contribute to a Trump Account or choose another type of account instead.
Here’s a high-level comparison:
|
Feature |
Trump Account |
529 Plan |
UTMA/UGMA Account |
|
Federal tax deduction for contributions |
No |
No (although many states offer tax deductions or credits) |
No |
|
Tax treatment of investment growth |
Tax-deferred |
Tax-free for qualified education expenses |
Taxable |
|
Investment flexibility |
Limited investment options |
Varies by plan |
Broad investment choices |
|
Primary purpose |
Long-term wealth building |
Education savings |
General savings for the child |
|
Restrictions on use |
Yes, under current law |
Qualified education expenses |
No restrictions once the child reaches the age of majority |
Which Option Makes the Most Sense?
The answer depends on your family’s goals.
Consider a Trump Account if:
- You want long-term, tax-deferred investing.
- Your child has many years before reaching adulthood.
- Family members or an employer plan to contribute.
- You expect the funds to be used for purposes permitted under current law.
Consider a 529 Plan if:
- College, graduate school, or trade school is a likely goal.
- Your state offers an income tax deduction or tax credit for contributions.
- You want tax-free withdrawals for qualified education expenses.
Consider a UTMA (Uniform Transfers to Minors Act) Account if:
- Flexibility is your highest priority.
- You want access to a wider variety of investment options.
- You are comfortable with the child gaining legal control of the assets when they reach the age of majority under your state’s law.
Our Take
For children born before 2025, the absence of the $1,000 federal contribution changes the analysis.
In many cases:
- A 529 Plan remains the strongest choice when education is the primary objective, particularly if your state offers a tax deduction or credit.
- A UTMA account may be preferable when flexibility is more important than tax advantages.
- A Trump Account can still be a useful long-term savings vehicle, but its value depends largely on your family’s financial goals because it does not provide an upfront federal tax deduction or the government seed contribution available to eligible children born in 2025 or later.
Final Thoughts
Every family’s financial situation is different. Before opening any account, consider how you expect the money to be used, the available tax benefits, and the long-term impact on your child’s financial future.
If you have questions about whether a Trump Account, a 529 Plan, or another savings strategy is the best fit for your family, we’d be happy to help you evaluate your options and develop a plan that aligns with your financial goals.
One note: because the Trump Account program is new, regulations and IRS guidance may continue to evolve.
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Eric S. Degen, CPA Titan Accountancy, LLC
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