Trump Accounts: A New Savings Option for Children
When it comes to saving for children, many families are familiar with 529 college savings plans and custodial investment accounts, such as UTMAs. A newer option, known as a Trump Account, was introduced in 2026 and provides another way to save and invest on behalf of a child.
As with most financial planning decisions, there is no single “best” account for every family. Instead, each account type serves a different purpose, and the best fit depends on a family’s goals, circumstances, and priorities. Understanding how Trump Accounts work can help families determine whether they deserve a place alongside more established savings vehicles.
What Is a Trump Account?
A Trump Account is a custodial investment account established for a child. While the account is opened and managed by a parent or guardian, it belongs to the child and is designed to encourage long-term saving and investing. In many ways, the account functions similarly to a retirement account, with special rules governing contributions, investments, and distributions.
One feature that has attracted significant attention is a government-funded contribution for eligible children. Eligible children born between January 1, 2025, and December 31, 2028, may receive a one-time $1,000 contribution from the U.S. Treasury to their Trump Account. This can provide an initial foundation for future growth.
Who Can Open One?
A Trump Account may be established for a child who is under age 18 and has a valid Social Security number. To qualify for the one-time $1,000 government contribution, the child must also be a U.S. citizen born between January 1, 2025, and December 31, 2028.
The account is generally opened by a parent or legal guardian, who acts as the custodian until the child reaches adulthood. Although the custodian oversees the account, the assets remain the property of the child.
How Do You Open One?
To open a Trump Account, you first need to complete and submit IRS Form 4547. This can be done either in the Trump Accounts app, when you file your taxes, or through the IRS website. The official Trump Accounts website, www.trumpaccounts.gov, provides a link to start the process. After the required election is submitted, the account is maintained through the Trump Accounts program and its participating financial institution. We cannot open the initial Trump Account on a client’s behalf, but we can help you think through how this type of account may fit into your broader financial plan.
How Contributions Work
Trump Accounts have what is referred to as a growth period, which lasts until December 31 of the year before the child turns 18. During this time, contributions can come from parents, grandparents, other family members, friends, employers, state governments, philanthropic organizations, and the child.
Annual contributions are currently limited to $5,000 per account, and the limit applies collectively to most non-government contributors. In other words, multiple individuals may contribute, but the total of those contributions generally cannot exceed the annual limit. Beginning after 2027, that limit is expected to be adjusted for inflation.
Employers may also contribute up to $2,500 annually to an employee’s account or to an employee’s dependent’s account without the contribution being treated as taxable income to the employee. Employer contributions count toward the overall $5,000 annual contribution limit.
Investment Restrictions During Childhood
Unlike many custodial accounts, Trump Accounts come with investment limitations while the child is under age 18.
Funds must generally be invested in diversified, low-cost mutual funds or ETFs that track broad U.S. equity indexes, such as the S&P 500, with expense ratios of 0.10% or less. The funds also cannot use leverage. The intent is to encourage broad market exposure and long-term investing while helping keep investment costs low.
For many families, this may be viewed as a positive feature. By limiting investment choices, the account emphasizes disciplined, long-term growth rather than short-term speculation.
What Happens at Age 18?
Beginning January 1 of the year the child turns 18, the growth period ends, and the child assumes control of the account. At that point, the account becomes more flexible and begins operating under rules that resemble those of traditional IRAs.
The account owner generally has several choices: leave the account invested, continue treating it as a Traditional IRA, convert some or all the account to a Roth IRA, or take a distribution subject to applicable tax rules.
Early Withdrawal Exceptions
After the growth period ends, distributions are generally subject to traditional IRA tax rules, including potential penalties for early withdrawals. However, certain exceptions may apply. Examples include qualified higher education expenses, first-time home purchases (up to $10,000), and birth or adoption expenses (up to $5,000).
How Do Trump Accounts Compare to 529 Plans and UTMAs?
Rather than viewing these accounts as competitors, it may be more helpful to think of them as tools designed for different objectives.
A 529 plan is generally the most efficient option when the primary goal is funding education expenses. A UTMA offers broad flexibility but transfers control to the child once they reach the applicable age of majority. Trump Accounts introduce a different approach, combining long-term investment growth with IRA-style tax treatment, contribution limits, and distribution rules.
The right choice ultimately depends on the intended purpose of the funds, the family’s overall financial picture, and how much flexibility is desired in the future.
Final Thoughts
Trump Accounts add another option to the growing list of strategies available for families looking to save on behalf of children. While they are unlikely to replace 529 plans or UTMAs entirely, they may offer planning opportunities for families seeking a long-term investment vehicle with IRA-style tax treatment and long-term savings features.
As with any planning strategy, the account itself is only one piece of the puzzle. The most important step is to ensure that the savings vehicle aligns with your family’s goals, time horizon, and broader financial plan.
Means Wealth Management is a registered investment adviser. This material is provided for informational and educational purposes only and does not constitute tax, legal, financial, or investment advice. Trump Accounts involve eligibility, tax, and planning considerations and may not be appropriate for all individuals. Please consult your financial advisor and qualified tax and legal professionals before making any financial decisions.