What You Need to Know About New “Trump Accounts” for Kids (IRS Notice 2025-68 Explained)
What are Trump Accounts?
Trump Accounts are a newly authorized type of individual retirement account (IRA) created by the federal government for children. They’re designed to give families a long-term savings vehicle that grows tax-deferred — similar to a traditional IRA — but with rules specific to accounts established for minors.
Under IRS Notice 2025-68, the government and Treasury have started issuing guidance on how these accounts will work before final regulations are published.
Unlike traditional or Roth IRAs, Trump Accounts do not require the child to have earned income in order to receive contributions. In that sense, they function as a government-authorized IRA structure without the usual income requirement — a feature that differs meaningfully from traditional and Roth IRAs available to minors in the past.
Who is Eligible?
A Trump Account can be created for any child who:
- Has a valid U.S. Social Security number, and
- Has not reached age 18 by the end of the year the election is made.
A special pilot program contribution applies only to children who are U.S. citizens born between January 1, 2025 and December 31, 2028.
This means a child born in that date range could receive a one-time $1,000 government contribution when the account is established.
This represents a new type of opportunity for families. Historically, retirement-style accounts required earned income, which limited children’s participation. Trump Accounts introduce a structure that allows long-term, tax-deferred investing beginning at birth — something not previously available under federal retirement account rules.
What About Children Born Before 2025?
Children born before January 1, 2025 do not qualify for the $1,000 federal seed contribution.
However, certain private organizations and charitable initiatives have announced plans to provide one-time seed deposits (often around $250) for eligible children under age 18, sometimes subject to additional age or geographic requirements.
Families should monitor updates as additional funding programs and eligibility details are finalized.
When Can You Open and Fund a Trump Account?
Although the law authorizes them now, no contributions can be made until July 4, 2026. Accounts may be established before that date once administrative systems are in place, but funding cannot begin until the permitted start date.
Guidance suggests that to establish an account and receive the government seed contribution, the parent or guardian will file IRS Form 4547, Trump Account Election, likely when filing a tax return or via a dedicated portal (trumpaccounts.gov) once available.
Contribution Rules
Here’s what you need to know about adding money to a Trump Account:
Who Can Contribute
Parents, grandparents, other family members, and friends can make contributions for the child.
Employers may contribute under a special written plan (“Trump Account contribution program”).
Government entities and charities may also make qualified contributions for eligible children.
Annual Limits
The total annual contribution limit from all sources (other than the government’s seed contribution) is $5,000 per year (subject to inflation adjustments after 2027).
Within that $5,000 cap:
An employer may contribute up to $2,500 per year toward a child’s Trump Account — and those employer contributions are not taxable income to the employee.
Special Rules
The government’s $1,000 seed contribution generally does not count against the $5,000 annual cap (but check current IRS guidance when final rules are released).
Unlike other IRAs, contributions to Trump Accounts don’t require the child to have earned income.
During the “growth period” (before the year the child turns 18), contributions are not deductible on anyone’s tax return.
A Note for Business Owners Considering Employer Contributions
If you own a business, you may establish a written “Trump Account contribution program.”
This requires formal documentation outlining eligibility, contribution structure, and administrative procedures, similar to other employer-sponsored benefit programs.
For business owners, potential benefits include:
- Providing a tax-advantaged family benefit if contributing for your own dependent
- Offering an additional employee benefit if you have staff
- Enhancing long-term employee retention and goodwill
- Making contributions that are excluded from employee taxable income (subject to program rules)
Business owners should confirm with their tax advisor whether their business entity structure permits participation and whether nondiscrimination rules would apply if employees are later added. Consultation with a tax advisor or ERISA professional is recommended before implementation.
Investment Rules
During the growth period (before the child turns 18):
Trump Account funds must be invested in eligible investments, which typically means low-cost index mutual funds or ETFs tracking U.S. stock market indexes like the S&P 500, with certain requirements on fees and diversification.
This investment constraint differentiates Trump Accounts from other retirement accounts where a broader range of investments may be held.
Distribution Rules: When Can Money Be Withdrawn?
Before age 18: Withdrawals are generally not allowed except in very limited circumstances (such as rollover to another Trump Account, correcting excess contributions, or death of the beneficiary).
After age 18: The Trump Account becomes subject to the traditional IRA distribution rules, as outlined in current guidance. That can include:
- Penalty on early distributions (subject to exceptions)
- Option for qualified higher education or first-home expense withdrawals depending on the rules in effect at that time
This structure encourages long-term saving and discourages early use of the funds.
Why Parents May Consider Contributing
The $1,000 seed deposit is a starting point — but the long-term impact depends on what happens next.
Here are several reasons parents may consider contributing beyond the initial government funding.
The decision isn’t only about the $1,000 — it’s about what long-term planning could look like over 18 years.
Tax-Deferred Growth
Earnings grow tax-deferred inside the account. That means no annual tax on dividends or capital gains during the growth period.
Over 18 years, the difference between taxed growth and tax-deferred growth can be significant.
Small, Consistent Contributions Add Up
Many families may not be able to contribute monthly — and that’s okay.
Instead of focusing on $100 per month, consider using seasonal cash flow:
- If you receive a tax refund, allocating $600 once per year is equivalent to $50 per month.
- Birthday or holiday cash gifts can be partially redirected.
- Even a few hundred dollars per year invested consistently over 18 years can compound meaningfully.
The key isn’t perfection — it’s consistency.
Turning It Into a Teaching Opportunity
A Trump Account can also serve as a structured financial education tool.
As your child grows, you can:
- Review the annual statement together.
- Explain how investing works.
- Discuss market ups and downs.
- Teach the concept of long-term planning versus short-term spending.
- Show how small deposits grow over time.
These conversations build financial literacy well before adulthood.
Even families who contribute modest amounts can use the account as a hands-on way to teach saving, investing, patience, and goal setting.
A Note to Grandparents
Grandparents often look for meaningful ways to support grandchildren financially.
Contributions to a Trump Account may serve as:
- A structured annual gifting strategy
- A way to gradually shift assets to the next generation
- A long-term wealth-building tool rather than short-term spending
Under current federal gift tax rules, individuals may gift up to the annual exclusion amount per beneficiary each year without filing a gift tax return. Contributions to a grandchild’s Trump Account would generally count toward that annual exclusion.
For grandparents focused on legacy planning, this can be a disciplined and tax-efficient way to support future financial independence.
How to Take Action (What You Can Do Now)
Understand eligibility: Ensure your child qualifies based on date of birth and citizenship.
Watch IRS guidance and forms: The IRS is issuing Form 4547 (Trump Account Election) and instructions, which are expected to be available well in advance of the 2026 contribution start date.
Plan contributions: Think about how a Trump Account would fit with other long-term savings goals (like 529 plans or Roth IRAs in your own name).
Stay current: Proposed regulations will continue to be issued, so check official IRS guidance and consider speaking with a financial planner or tax advisor before making decisions based on preliminary guidance.
What Families Should Keep in Mind
These accounts are still new. Implementation details, participating financial institutions, and administrative processes are continuing to develop. Families should compare this option with other savings strategies to determine what aligns with their long-term goals, tax situation, and estate planning objectives. As with any new program, clarity and careful evaluation are important before making contributions.