Trump Accounts: What Are They and Are They Right for Your Child?

If you had a child in 2025, or are expecting one before the end of 2028, there's a new opportunity that could give them a meaningful financial head start. Created under the One Big Beautiful Bill Act, Trump Accounts (Section 530A accounts) are designed to help families invest early on behalf of their children and take advantage of decades of potential tax-deferred growth. Even more compelling, eligible children born between January 1, 2025, and December 31, 2028, may receive a one-time $1,000 federal seed contribution, providing an immediate foundation for long-term wealth accumulation. For many families, this may be one of the simplest and most valuable steps they can take to begin investing in their child's future — but are they right for your family?

What Is a Trump Account?

Trump Accounts are a specialized retirement savings vehicle designed for minors, offering tax-deferred growth while operating under a distinct set of rules until the beneficiary reaches age 18, at which point the account becomes subject to traditional IRA rules. Contributions are made with after-tax dollars, investment growth is tax-deferred, and assets are invested in low-cost U.S. stock index funds. Investment options are limited to broad-based U.S. equity index funds and ETFs with expense ratios of 0.10% or less.

How to Open a Trump Account

Opening an account is straightforward. A parent, guardian or other authorized adult will be able to establish a Trump Account using IRS-designated procedures, including filing Form 4547 online or with your tax return and following related enrollment processes and, if eligible, claim the federal seed contribution. 

Contribution Rules

Families, grandparents, friends and even employers can contribute, with annual contributions currently capped at $5,000 per child. Employers can establish a Trump Account Contribution Program and contribute up to $2,500 annually per participating employee and count toward the child's overall contribution limit. These employer contributions count toward the overall $5,000 annual contribution limit for the child.

Contributions are not tax-deductible, but they generally qualify for the annual gift tax exclusion rules, making them an effective way to transfer wealth to the next generation.

Trump Accounts vs. Other Savings Vehicles

The biggest advantage is the opportunity to start investing early, especially for children who qualify for the $1,000 federal contribution. However, Trump Accounts are not necessarily a replacement for other savings vehicles. A 529 plan remains one of the most effective tools for education savings because qualified withdrawals can be tax-free and unused assets may be eligible for a Roth IRA rollover. Meanwhile custodial accounts, such as UGMAs and UTMAs, offer greater flexibility but give the child full control of the assets once they reach the age of majority, typically age 18 or 21.

For many families, the decision isn't whether to choose a Trump Account or a 529 plan. Instead, it may make sense to use both. A 529 can help fund future education expenses, while a Trump Account provides an additional way to build long-term wealth for a child.

For families with eligible children, the $1,000 federal contribution alone makes a strong case for opening an account. Whether it becomes a primary savings vehicle or a complement to an existing strategy, a Trump Account offers another opportunity to invest in your child's financial future.

If you'd like to learn more about Trump Accounts and how they may fit into your overall financial plan, reach out to your Johnson Financial Group advisor, who would be happy to discuss your goals and help you build a strategy that supports your journey toward financial independence.