In 2025, a new savings account was born. “Trump Accounts” are a type of Individual Retirement Account (IRA) specifically for children under age 18 on December 31 of the year the account is opened.
The newsworthy feature of the Trump Account is $1,000 of seed money. Eligible American children born between January 1, 2025, and December 31, 2028, may receive $1,000 from the federal government.
Parents can open Trump Accounts for their children by filing IRS Form 4547 and adding to the account after July 4, 2026. In fact, other individuals, such as grandparents and other family members, can contribute to the account as well. Even employers and charities can add money to the Trump Accounts. There are contribution limits: a maximum of $5,000 per year per child.
Sounds great! What’s the catch?
There are more rules for a Trump Account than almost any other type of IRA, from the specific investments available for use to the future tax planning implications of opening the account.
The accounts must be invested in a limited menu of low-cost mutual funds or ETFs mirroring the S&P 500 or another American stock index. According to trumpaccounts.gov, additional funds and investment options will be added in the future.
Mechanically speaking, the Trump Accounts will initially be managed by the institutional financial agent BNY, using Robinhood’s technology and brokerage services. Starting July 4, 2026, a digital-first experience via the app or TrumpAccount.com serves as the primary access point for parents to view their child’s Trump Account and make contributions.
Before a child turns 18, funds in the Trump Account are generally locked up and cannot be withdrawn. When a child turns 18, the child has full access and control of their own Trump Account. For some parents, this is a disturbing proposition considering the potential for large balances in the hands of people who cannot legally order a glass of beer with their burger.
An astute 18-year-old might consider the tax implications before withdrawing their money to buy a spiffy sports car (or maybe not). Trump Accounts may be subject to taxes and penalties on the earnings portion of the account. Money contributed by institutions (government, charity, employers) could be subject to tax and penalty at the time of withdrawal. Trump Accounts and IRAs are similar in their age-based penalties: withdrawals before age of 59 ½ are subject to an IRS penalty, with some exceptions for qualified expenses.
Like anything else, the utility of these brand-new Trump Accounts is yet to be fully realized. For most people, it is simply a tool in their toolbox for funding future savings goals for the next generation. Flexibility, timing, taxes, and parental control are important factors to consider. A Trump Account may live in a toolbox with other tools such as 529s, UTMA/UGMAs, brokerage accounts, and kiddie bank accounts, to name a few.
Whenever the topic of saving for the next generation comes up, we remind our clients to put their own oxygen masks on before helping someone else put theirs on. In other words, think of your own retirement needs and timeline before overextending to pay for someone else’s future expenses.
Kristina is a Senior Financial Advisor with Greenspring Advisors. She is a Certified Financial Planner ® and an Enrolled Agent. Outside of her work, she enjoys spending time with her husband and toddler on their quiet property in Southern Lancaster County.
For questions or commentary about the articles written by Kristina, or ideas for future topics you’d like to see addressed, email her at: kristina.groff@greenspringadvisors.com
Resources:
https://www.irs.gov/trumpaccounts
https://corporate.vanguard.com/content/corporatesite/us/en/corp/articles/what-to-know-about-new-trump-accounts-for-kids.html
https://www.whitehouse.gov/research/2025/08/trump-accounts-give-the-next-generation-a-jump-start-on-saving/ https://www.bny.com/corporate/global/en/about-us/newsroom/press-release/bny-named-financial-agent-for-trump-accounts.html
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