Trump Accounts Are Here: What Families Need to Know
2025 was a landmark year for tax legislation as the One Big Beautiful Bill Act (OBBBA) extended many of the expiring tax rates and brackets while introducing new provisions. One notable change was the creation of Trump Accounts, a new type of tax-advantaged account designed to help minors build long-term savings. Following a period of implementation and guidance from the Treasury Department, Trump Accounts launched nationwide on July 4, 2026.
A High-Level Look at Trump Accounts
Trump Accounts are structured around two distinct life-cycle stages: the growth period and the post-growth period, as determined by the beneficiary’s 18th birthday calendar year.
* During the growth period, no distributions are allowed except for rollovers to another Trump Account, death of a beneficiary, transfers to an ABLE account at age 17 or a distribution to correct an excess contribution.
Here are five types of contributions that can be made to a Trump Account:
Source: U.S. Internal Revenue Service, "Notice 2025-68: Notice of Intent to Issue Regulations with Respect to Section 530A (Trump Accounts)," Internal Revenue Bulletin 2025-52 (December 22, 2025): 856, irs.gov.
Other Key Points on Trump Accounts
- A conversion of a Trump Account in the post-growth phase to a Roth IRA may have kiddie-tax implications, depending on the beneficiary’s circumstances. The kiddie tax applies to dependents as old as 23 years if they are full-time students receiving more than half of their support from parents (for more information on the kiddie tax see https://www.irs.gov/taxtopics/tc553).
- Trump Account contributions do not impact or count toward the IRA contribution limit; meaning, if a minor has earned income from employment, the minor may also be eligible to make an IRA contribution, subject to applicable IRA contribution requirements
- There can only be one Trump Account for an individual at any time and must be established by an “authorized individual”*
- Unlike IRAs, there is no ability to make a prior-year contribution into a Trump Account.
- The $1,000 pilot program contribution for newborns is not automatic, meaning that families need to establish a Trump Account to receive the contribution.
*An authorized individual includes a legal guardian, parent, adult sibling, or grandparent of the child, in that order of priority. If more than one person meets the conditions to be an authorized individual, subject to the order of priority, and no prior Trump account election has been made for the child, then any of the authorized individuals can make the election.
Clarity on Trump Accounts
- As with other new tax provisions, the OBBBA established the basic framework for Trump Accounts, while additional guidance from the Treasury Department was needed to address more of the specific implementation details. Over the past few months, additional clarification has been provided, including that contributions are eligible for the annual gift tax exclusion. For 2026, the annual federal gift tax exclusion is $19,000 per recipient ($38,000 for married couples electing to split gifts). The Department of Labor clarified that employers would not be subject to certain ERISA plan requirements, which may reduce certain administrative considerations for employers making Trump Account contributions for employees.
- The Treasury Department announced that Trump Accounts can accept philanthropic contributions of stock shares in addition to cash contributions.
There are still a few areas that require further clarification including:
- How do Trump Accounts impact federal financial aid? For example, will the account be treated as an asset of the parent or the minor child for purposes of determining federal financial aid eligibility? For federal financial aid purposes, a parent asset is treated more favorably in the aid calculation.
- Further clarification is needed regarding certain administrative requirements for employers to facilitate employee contributions for Trump Accounts.
- More guidance is needed on the mechanics of philanthropic stock contributions by nonprofit organizations to Trump Accounts.
Where Trump Accounts May Fit in Financial Planning
Trump Accounts can provide families with another tax-advantaged option for long-term savings. Families of eligible newborns should consider establishing an account to take advantage of the federal seed contribution of $1,000. Whether additional contributions make sense will depend on the family’s individual circumstances, financial goals and use of the funds. For example, families primarily focused on funding education may also want to evaluate a 529 savings plan, which generally provides tax-free withdrawals for qualified education expenses. Consulting with a financial advisor or tax professional can help families determine how a Trump Account fits within their broader plan.
Follow Bill Cass, CFP®, CPWA® for more content like this
WHAT ARE THE RISKS?
All investments involve risks, including possible loss of principal.
Any information, statement or opinion set forth herein is general in nature, is not directed to or based on the financial situation or needs of any particular investor, and does not constitute, and should not be construed as, investment advice, forecast of future events, a guarantee of future results, or a recommendation with respect to any particular security or investment strategy or type of retirement account. Investors seeking financial advice regarding the appropriateness of investing in any securities or investment strategies should consult their financial professional.
Franklin Templeton, its affiliated companies, and its employees are not in the business of providing tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties or complying with any applicable tax laws or regulations. Tax-related statements, if any, may have been written in connection with the “promotion or marketing” of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.