The introduction of the Trump Account marks a historic shift in how American families can build wealth for their children. Created under the Working Families Tax Cuts Act (also known as OBBBA), this tax-advantaged investment vehicle is a powerful new tool designed to help every American child build lifelong wealth.
This guide will make it simple to understand how to open a Trump Account, who can get the free $1,000 and $250 gifts, the rules for the annual $5,000 contribution limit, and a tax strategy that can allow the account to grow tax-free after the child turns 18.
What Is a Trump Account?
A Trump Account is a tax-advantaged investment account specifically for U.S. citizens under the age of 18. These accounts are designed to grow over time, invested in broad American stock market indices like the S&P 500. The goal is simple: ensure that every child, regardless of their family's income, has a financial foundation by the time they reach adulthood. According to trumpaccounts.gov, these accounts are fully in the child's name, with the parent or guardian serving as the custodian until the child turns 18.
| Feature | Details |
|---|---|
| Initial Investment | $1,000 (for children born in 2025-2028) |
| Private Gift | $250 (for eligible low/middle-income ZIP codes) |
| Annual Limit | $5,000 (indexed for inflation after 2028) |
| Investment Type | U.S. Equity Index Funds (Fees ≤ 0.10%) |
| Ownership | Child (Custodian: Parent/Guardian until 18) |
How to Create a Trump Account: Step-by-Step
Registering your child is easy and can be completed when you file your tax return. The Internal Revenue Service (IRS) has released Form 4547, titled "Trump Account Election(s)," specifically for this purpose.
File Form 4547
You can attach this form to your 2025 federal income tax return. If you have already filed or do not need to file a return, it can also be submitted as a stand-alone document.
Provide Identification
You will need your child's valid Social Security Number (SSN) to open the account.
Choose the Treasury Option
On the form, you can elect to have the U.S. Treasury make the initial $1,000 pilot program contribution if your child qualifies.
Activate Online
Starting in May 2026, the Treasury will send an authentication notice. You can then log in to trumpaccounts.gov to activate the account.
Receive Seed Money (if your child qualifies)
The $1,000 government seed money and/or the $250 Dell gift will be deposited into the account shortly after the account is successfully activated in mid-2026.
Who Qualifies for the $1,000 Seed Money and $250 Dell Gift?
The government and private donors have provided two distinct ways for your child's account to start with an immediate balance.
The $1,000 Treasury Contribution
The "Pilot Program Contribution" of $1,000 is available to every American child born between January 1, 2025, and December 31, 2028. To receive this, the account must be opened before the child turns 18. This is a one-time seed from the U.S. Treasury intended to jumpstart the compounding process.
The $250 Dell Gift
In a historic act of philanthropy, Michael and Susan Dell committed $6.25 billion to support American families. This gift provides an additional $250 to the first 25 million children age 10 and under who live in ZIP codes where the median household income is below $150,000. This specifically targets low- and middle-income families to ensure they have an even stronger start.
Maximizing Growth: The $5,000 Annual Contribution
Once the account is established, the power of compounding can be accelerated through additional contributions. The annual contribution limit is $5,000 per child, a limit that will be indexed for inflation starting in 2028. Contributions to Trump Accounts may begin after July 4, 2026.
Who Can Contribute?
A key feature of the Trump Account is the flexibility of its funding sources. Contributions are not limited to the parents or guardians.
- Family and Friends: Parents, grandparents, other family members, and friends can all contribute to the child's account.
- The Child: The child themselves can contribute any money they earn or receive as gifts.
- No Earned Income Requirement: Unlike a traditional IRA, a child does not need to have a job or earned income for these contributions to be made.
Employer Match
Employers can contribute up to $2,500 per year toward an employee's dependent's Trump Account through an employer-sponsored cafeteria plan. This amount is excluded from the employee's taxable income, making it a powerful "pre-tax" benefit.
Ownership at Age 18 and Withdrawal Rules
At age 18, the Trump Account is entirely the child's. They are free to continue letting the funds grow, or they can begin to withdraw funds. The account officially transitions from a custodial account to one governed by rules similar to a Traditional Individual Retirement Account (IRA).
Withdrawal Rules and Tax Implications
While the money has grown tax-deferred, withdrawals are subject to standard IRA rules:
- Taxable Income: Withdrawals are taxed as ordinary income in the year they are taken.
- 10% Penalty: Withdrawals made before the account holder reaches age 59½ are generally subject to a 10% early withdrawal penalty.
- Penalty Exceptions: The law provides important exceptions to the 10% penalty, which are particularly relevant for young adults:
- • Higher Education Expenses: Funds can be withdrawn penalty-free to pay for qualified higher education expenses.
- • First Home Purchase: Up to $10,000 can be withdrawn penalty-free for a first-time home purchase.
The Ultimate Growth Strategy: The Age 18 Roth Conversion
Under the One Big Beautiful Bill Act (OBBBA) and IRS Notice 2025-68, the rules for Trump Accounts change once the individual turns 18, they are subject to the same rules that apply to traditional IRAs. Notice 2025-68 specifically states that, as a result, funds in a Trump Account may be converted to a Roth IRA starting in the year the individual reaches age 18.
By converting the balance to a Roth IRA, the entire account—which could be substantial after 18 years of contributions and market growth—can continue to grow tax-free for the rest of the individual's life. This allows for decades of tax-free wealth building, providing a head start on retirement savings and financial security previously unavailable to many families.
Financial Literacy and Long-Term Security
Trump Accounts are designed to promote financial education while helping children build a strong long-term financial foundation. As noted on the official website, these accounts allow children to learn about investing over time and see the power of compounding firsthand as their savings grow.
By understanding how to open an account, who can contribute, and the strategic opportunity to convert it to a Roth IRA at age 18, parents can give their children a meaningful head start toward financial security. The free government money, the ability for anyone to contribute, and the powerful tax benefits make Trump Accounts a truly valuable tool for building wealth and a brighter future for your kids.
Frequently Asked Questions
It's a special savings account for kids under 18 that helps their money grow tax-free. It's like a retirement account, but for children, and they don't need a job to have one.
You can fill out IRS Form 4547 with your 2025 tax return, or use the online option at trumpaccounts.gov starting mid-2026.
Yes! Children born between 2025 and 2028 can get a free $1,000 from the government. Some children in lower-income areas can also get an extra $250.
You, family, or even employers can put up to $5,000 into the account each year.
When your child turns 18, their Trump Account automatically becomes a traditional IRA. The smartest move is to then convert it into a Roth IRA. This is because money in a Roth IRA can grow and be taken out completely tax-free later in life, as long as they follow the rules.
Yes. Once the child turns 18, the account is treated like a traditional IRA. Withdrawals for qualified higher education expenses are one of the exceptions to the 10% early withdrawal penalty that usually applies before age 59½.
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- TrumpAccounts.gov: Official Website
- White House: Landmark Dell Gift Supercharges Trump Accounts
- One Big Beautiful Bill Act (OBBBA) / IRS Notice 2025-68 Guidance
