The Trump Account Guide: How the New §530A Child Investment Account Works (and Whether Your Child Qualifies)
If you’re a parent, you’ve probably had this thought: “I want to invest early for my kid—but I don’t love the limits on how I can use the money later.”
A Roth IRA for kids is powerful, but it generally requires the child to have earned income (W-2 wages or self-employment income).
A 529 plan is great for education, but it’s primarily built around qualified education expenses.
A custodial (UTMA/UGMA) investment account is flexible, but you’re dealing with annual taxable income and potentially the “kiddie tax” rules.
Now there’s a new option on the horizon: Trump Accounts—a new type of child investment account created under IRC §530A. The IRS describes them as a traditional IRA with special rules while the child is under 18.
And yes—the headline-grabber: a $1,000 pilot program contribution from the U.S. Treasury may be available for certain children born from 2025 to 2028, if the election requirements are met.
In this guide, I’m going to walk you through:
What a Trump Account is
Who qualifies (for the account and for the $1,000 deposit)
The real rules behind the $5,000 annual limit
How taxes and withdrawals work (and what’s “tax-advantaged” about it)
What you can do now—before accounts start accepting contributions
What Is a Trump Account?
A Trump Account is a traditional IRA under IRC §408(a) that’s established for a child under 18—but with a special set of rules during the child’s “growth period.”
Key plain-English points:
It’s an IRA for a child. The IRS explicitly states the account is a traditional IRA and cannot be a Roth IRA or a SIMPLE IRA.
The child is the owner/beneficiary, but a parent/guardian (or other authorized individual) acts as the responsible party while the child is a minor.
During the growth period (generally until the end of the year before the child turns 18), there are special limits on investments, contributions, and withdrawals.
The “growth period” definition (this matters)
The IRS draft instructions define the growth period as starting when the account is established and ending on December 31 of the year before the year the child turns 18.
Who Can Have a Trump Account?
Eligibility to open an account (broader than the $1,000 headline)
A child can generally have an initial Trump Account established if the child:
is under age 18 at the end of the year the election is made, and
has a valid Social Security number issued before the election is made.
The draft instructions even provide a concrete example for 2026 elections: if you elect in 2026, the child must have been born after December 31, 2008 to be under 18 at the end of that year.
Who is allowed to make the election?
To open an initial Trump Account (without the pilot deposit election), the authorized individual is generally a:
legal guardian, 2) parent, 3) adult sibling, or 4) grandparent—in that order of priority.
The election is expected to be made on IRS Form 4547 or through an online tool/application on trumpaccounts.gov (planned for mid-2026).
Who Qualifies for the $1,000 Treasury Pilot Deposit?
This is the part most people will ask about first, so here’s the cleanest way to say it:
A child may qualify for the $1,000 pilot program contribution if the authorized individual makes the required election and the child meets the eligibility rules— including being:
born after December 31, 2024 and before January 1, 2029 (i.e., birth years 2025–2028),
a U.S. citizen,
issued an SSN, and
with no prior pilot program contribution election made for them.
Also, the election is tied to “qualifying child” status (in the dependency sense, generally under IRC §152(c)). The draft instructions refer you to Pub. 501 for that determination.
One more timing detail: the Treasury contribution won’t be deposited earlier than July 4, 2026.
Timeline: When Can You Open One and Start Contributing?
Here’s what current federal guidance says:
Contributions can’t be made before July 4, 2026.
Treasury expects to send activation/authentication information starting in May 2026 after an election is processed.
The online election tool is expected to be available mid-2026 on trumpaccounts.gov.
The official site also states families can open accounts in early 2026 and contribute starting July 4, 2026. Trump Accounts
Practical takeaway: If you’re expecting this to work like walking into a brokerage next week, it won’t. The current structure anticipates a Treasury/IRS election + activation flow first.
The $5,000 Annual Limit: What It Really Means
You’ll see “$5,000 annual limit” everywhere. The technical version is:
During the growth period:
Pilot program contributions, qualified general contributions, and qualified rollover contributions are not subject to the annual contribution limit.
But all other contributions—specifically IRC §128 employer contributions and contributions from other sources—are subject to an aggregate annual limit of $5,000 (with cost-of-living adjustments after 2027).
The IRS news release also summarizes this: parents/relatives can contribute up to $5,000 per year, and employers can contribute up to $2,500 per year.
Do contributions require the child to have earned income?
No—this is one of the biggest differences versus a normal IRA contribution.
The IRS guidance states contributions can be made during the growth period even if the account beneficiary does not have includible compensation.
Is any of this deductible?
No deduction is allowed under IRC §219 for contributions to a Trump Account.
So when you hear “tax-advantaged,” think tax-deferred growth, not an up-front deduction.
What Can the Account Invest In?
During the growth period, account funds may be invested only in “eligible investments.”
In general, an eligible investment is a mutual fund or ETF that:
tracks an index of primarily U.S. companies,
does not use leverage, and
has annual fees/expenses of no more than 0.1% of the balance (10 basis points), plus any other criteria the Secretary determines.
Also, money market funds and cash generally are not eligible investments (with limited, short-term cash handling exceptions to process contributions/dividends/sales proceeds).
Planning note: This design strongly nudges the account toward low-cost index-style investing during the child’s minority.
Withdrawals: When Can Your Child Access the Money?
This is where the rules are stricter than many parents expect.
During the growth period: withdrawals are generally prohibited
During the growth period, no distributions may be made except for a narrow set of permitted distributions (qualified rollovers, qualified ABLE rollovers, excess contributions, or death).
After the growth period: traditional IRA rules generally apply
After the growth period—starting January 1 of the year the child turns 18—distributions are generally subject to traditional IRA rules, including the possibility of the 10% additional tax on early distributions under IRC §72(t) if an exception doesn’t apply.
The IRS specifically points out that exceptions may apply (examples given include qualified higher education expenses or first home purchases).
And it’s important to be clear on what the “penalty exception” does and does not do:
The 10% additional tax applies to the portion included in gross income and is in addition to regular income tax.
The “Hidden” Tax Detail: Basis and What’s Actually Taxable Later
Trump Accounts borrow the “basis” concept you may know from nondeductible traditional IRAs—but with a twist.
According to IRS guidance:
Pilot program contributions, qualified general contributions, and §128 employer contributions do not create basis in the account.
Contributions from other sources (for example, parents or grandparents contributing personally) do create basis.
After the growth period, distributions are taxed under IRA distribution rules:
amounts allocable to basis are not includible in gross income
earnings (and other non-basis amounts) generally are includible in gross income.
One more technical point that matters if you (the parent) also have IRAs: the IRS states the IRA aggregation rule under IRC §408(d)(2) is applied separately for Trump Accounts versus other IRAs—so Trump Account basis is tracked and allocated separately.
| Feature | Trump Account (§530A) | 529 Plan (QTP) | Custodial (UTMA/UGMA) | Roth IRA for kids |
|---|---|---|---|---|
| Primary tax benefit | Tax-deferred growth; after the child turns 18, the account is generally treated as a traditional IRA. | Earnings generally not taxable when distributions are used for qualified education expenses (taxable to the extent distributions exceed qualified expenses). | No special tax deferral; investment income is taxable annually, and the “kiddie tax” can apply to a child’s unearned income above the annual threshold. | Tax-free qualified distributions (subject to Roth IRA rules); contributions generally require the child to have taxable compensation. |
| Who can contribute | Other persons can contribute (up to the annual aggregate limit); employers can also contribute under employer programs (subject to limits). | Anyone can contribute (plan rules vary by state and plan). | Anyone can contribute (custodial account rules vary by state). | The child is the account owner; contributions are limited by the child’s taxable compensation (funding can come from parents/others as a gift, but the contribution must be “based on” the child’s earnings). |
| Access before 18 | Generally no withdrawals before January 1 of the year the child turns 18. | Distributions are allowed; tax results depend on whether the distribution is used for qualified education expenses. | Custodian can use funds for the child’s benefit (subject to UTMA/UGMA rules and fiduciary duties). | Contributions may be withdrawn under Roth IRA ordering rules (strategy-dependent; not covered in this section). |
If your goal is education-first, a 529 is still often the cleanest tool. If your goal is broad long-term investing for the child with forced discipline until adulthood, the Trump Account is designed to fit that lane.
Step-by-Step: What I’d Do If You Want to Use Trump Accounts
Step 1: Confirm which “bucket” your child is in
Born 2025–2028 + U.S. citizen + SSN? You may be in the bucket that can qualify for the $1,000 Treasury pilot deposit if the election requirements are satisfied.
Under 18 with SSN (even if born earlier)? You may still be eligible to open an account, but without the pilot deposit.
Step 2: Plan for the real timeline (not the hype timeline)
No contributions before July 4, 2026. Trump Accounts
Election via Form 4547 or an online tool expected mid-2026.
Activation info starting May 2026 after the election is processed.
Step 3: Decide how you’ll fund it (and avoid accidental excess contributions)
Remember: the $5,000 limit during the growth period applies to:
employer contributions under §128, plus
contributions from “other sources.”
So if an employer is contributing, you need a coordinated plan to avoid going over the annual cap.
Step 4: Get on the official update list
The official site includes an email submission form for updates, and it states accounts can open in early 2026 with contributions starting July 4, 2026. Trump Accounts
If you want a direct action item today: join the waitlist/updates list here:
Trump Accounts
Step 5: Set expectations about “tax-advantaged”
I’d summarize the tax posture like this:
No §219 deduction for contributions.
Growth is inside an IRA wrapper (tax-deferred mechanics after the growth period).
Withdrawals after 18 are generally taxed like traditional IRA withdrawals; early withdrawal penalties may apply unless an exception applies.
Real-World Example (With Numbers)
Let’s say:
Your child qualifies for the $1,000 pilot deposit.
You contribute $5,000 per year during the growth period (and no employer contributions)
The account earns a hypothetical average 7% annual return (this is just an assumption for illustration).
If you contribute $5,000/year for 18 years, plus the $1,000 pilot deposit, the account could grow to roughly $173,000 by the time the child reaches 18 (again, purely a hypothetical growth illustration).
Now the tax nuance:
Your $5,000/year contributions are “other source” contributions and create basis.
The $1,000 pilot deposit does not create basis.
If total basis from your contributions is $90,000 (18 × $5,000), and the account value is $173,000, then basis is about 52% of the account.
If your child takes a $30,000 distribution after the growth period, the IRS guidance indicates basis is allocated proportionally within the Trump Account (separately from any other IRAs).
So approximately:
~$15,600 could be treated as a non-taxable return of basis
~$14,400 could be included in gross income (and potentially subject to the 10% additional tax if no exception applies)
If that $30,000 was used for qualified higher education expenses, the IRS “exceptions to the 10% additional tax” list includes education as an IRA exception.
But even when the penalty is avoided, the taxable portion can still be taxable income—because the 10% is an additional tax on top of regular income tax.
Common Mistakes I Expect to See (and How to Avoid Them)
1) Assuming the $1,000 Treasury deposit is automatic
It’s tied to an election and eligibility requirements.
Fix: Plan to make the election via Form 4547 (or the online tool when available).
2) Thinking the Trump Account is a Roth IRA
It’s explicitly a traditional IRA (not Roth).
Fix: Build your plan around tax-deferred growth, not tax-free withdrawals.
3) Overfunding because you forgot employer contributions count
The $5,000 annual limit applies in aggregate to employer contributions plus other-source contributions.
Fix: If your employer is contributing, reduce what you contribute personally.
4) Parking money in cash or a money market fund
Those are generally not eligible investments during the growth period (with limited short-term cash handling exceptions).
Fix: Expect low-cost index-type funds/ETFs as the investment menu.
5) Forgetting basis tracking
Some contributions create basis, others don’t.
Fix: Keep clear records of contributions you (and others) make personally, because that may reduce taxable distributions later.
6) Not planning for “kiddie tax” risk after 18
Unearned income for certain children (including some older dependents) can be subject to kiddie tax rules.
Fix: Before a big distribution at age 18–23, run the child’s tax projection.
FAQ
Are Trump Accounts “tax-free”?
No. Contributions are not deductible, and taxable income can arise on distribution (except for amounts allocable to basis).
Can I open a Trump Account for a child who wasn’t born 2025–2028?
Yes—those birth years are tied to the $1,000 pilot deposit eligibility. But a Trump Account can generally be established for a child under 18 with a valid SSN.
Can grandparents contribute?
Yes—“contributions from other sources” are permitted (subject to the annual limit rules during the growth period).
Can my employer contribute?
Yes, and the IRS guidance references employer contributions under IRC §128 (with additional structural requirements).
Can the child withdraw money before 18?
Generally no—distributions are restricted during the growth period except for limited permitted distributions like qualified rollovers, qualified ABLE rollovers, excess contributions, or death.
What happens when the child turns 18?
Beginning January 1 of the year the child turns 18, distributions are generally subject to traditional IRA rules (including possible §72(t) additional tax if no exception applies).
Call to Action
If you want to be first in line when accounts open, join the official updates list here:
Trump Accounts
And if you want help deciding whether a Trump Account, 529 plan, Roth strategy for working teens, or a hybrid approach makes the most sense for your family’s tax picture, book a planning call with The RVA Accountant:
Disclaimer
This article is for educational purposes only and does not constitute tax, legal, or accounting advice. Consult with your tax advisor before implementing any strategy discussed here.