What Are Trump Accounts (IRC §530A)?

Article Summary

• Trump Accounts (IRC §530A) are new federal tax-deferred custodial IRA accounts for minors under age 18, created by the One Big Beautiful Bill Act (signed July 4, 2025), with standard traditional IRA treatment beginning at age 18.
• Eligible U.S. citizen children with a Social Security number may open an account, and children born between January 1, 2025 and December 31, 2028 may qualify for a $1,000 government seed contribution by filing IRS Form 4547.
• Contributions are capped at $5,000 per year per child, invested in low-cost U.S. index funds or ETFs, and grow tax-deferred (not tax-free), with withdrawals generally taxed as ordinary income after age 18.

What Are Trump Accounts (IRC §530A)?

March 3, 2026

Trump Accounts are a new federal, tax‑deferred investment account for children under age 18, created by the One Big Beautiful Bill Act (signed July 4, 2025). Structurally, they are custodial traditional IRAs for minors with special rules during childhood and standard IRA treatment once the child turns 18.

Who Is Eligible?

• Any U.S. citizen child under age 18 with a valid Social Security number may have a Trump Account opened on their behalf.
• Government $1,000 seed contribution:
  • Available only for children born January 1, 2025 – December 31, 2028
  • Requires making an election on IRS Form 4547 (or via the official portal),
• Children born outside that window can still have an account, just without the $1,000 government deposit.

How and When Accounts Are Opened

• Accounts are elected using IRS Form 4547, typically filed with the 2025 or later tax return, or separately with the IRS.
• Initial accounts are administered by the U.S. Treasury, with rollovers to private financial institutions allowed later.
• Contributions may begin July 4, 2026 (investment growth begins once funded).

Contribution Rules

• Annual contribution limit: $5,000 per child, separate from IRA limits.
• Contribution sources:
  • Parents, grandparents, friends (after‑tax dollars)
  • Employers of a parent (up to $2,500, excluded from employee income)
  • Government and charitable contributions
• No income phase‑outs apply (unlike Roth IRAs).

Investment Restrictions

• Funds must be invested in low‑cost U.S. index funds or ETFs
• Leverage and speculative investments are prohibited
• Expense ratios are capped (designed to resemble TSP‑style investing)

Tax Treatment

During Childhood (Before Age 18)

• Growth is tax‑deferred, not tax‑free
• No withdrawals allowed except limited rollovers or special circumstances

At Age 18 and Beyond

• The account converts to a traditional IRA
• Withdrawals are generally taxable as ordinary income
• Contributions made with after‑tax dollars create basis, which is not taxed again
• Employer, government, and charitable contributions do not create basis and are fully taxable when withdrawn

Important misconception: Trump Accounts are not “tax‑free.” Taxes are deferred, not eliminated.  

Frequently Asked Questions About Trump Accounts

What is a Trump Account and how does it work?
A Trump Account (IRC §530A) is a federally created, tax-deferred custodial IRA for children under age 18. During childhood, funds grow tax-deferred with limited access. At age 18, the account converts to a traditional IRA, and withdrawals are generally taxed as ordinary income.

Who qualifies for the $1,000 government contribution?
U.S. citizen children born between January 1, 2025 and December 31, 2028 with a valid Social Security number may qualify for the $1,000 government seed contribution by filing IRS Form 4547 (or using the official IRS portal). Children born outside this window may still open accounts but will not receive the government deposit.

Are Trump Accounts tax-free like Roth IRAs?
No. Trump Accounts are tax-deferred, not tax-free. Investment growth is deferred during childhood, but withdrawals after age 18 are generally taxable as ordinary income. After-tax contributions create basis and are not taxed again, while employer, government, and charitable contributions are fully taxable upon withdrawal.

For additional guidance, contact the Larson & Company Tax Team.