Trump Accounts Are Not Just For Newborns—Here's Why |
This year’s Fourth of July celebrated America’s 250th birthday as well as one year since President Trump signed the One Big Beautiful Bill Act into law. A key feature of this legislation created the so-called “Trump Accounts,” special tax-advantaged savings accounts designed to help younger Americans develop wealth. While many people focus on the $1,000 free seed funding provided by the U.S. government for any child born in 2025, 2026, 2027 and 2028, others may not realize that Trump Accounts are for more than just neworns.
What Trump Accounts Actually Do
A Trump Account is a new type of tax-advantaged savings account created for children. The Trump Account has two key aspects. First is the initial seed funding.
For any child born between Jan. 1, 2025, and Dec. 31, 2028, the child’s parents (or legal guardians) can set up a Trump Account for the child and receive $1,000 in seed funding. Second, the Trump Account can receive up to $5,000 a year in additional contributions from family, friends and even employers. Thus, a child born in 2026 can have up to roughly $91,000 in contributions (not to mention the appreciation of these funds) by the time the child turns 18.
Trump Accounts function like a traditional IRA, where the money grows tax-deferred. Withdrawals tax the appreciation as ordinary income, and they tax any contributions that weren’t made with after-tax family money — including the $1,000 federal seed deposit and employer contributions. Contributions made directly by parents, grandparents or other individuals come out tax-free, since they were already taxed as after-tax dollars going in. Once the child turns 18, the Trump Account automatically becomes a traditional IRA, and the child........