Article | by Geffen Mesher

Introduced under the One Big Beautiful Bill Act (OBBBA), a Trump Account is a new type of traditional IRA for children. It is a special custodial savings and investment account designed to give minors a head start on building long-term wealth. Public contributions officially open July 4, 2026. This program establishes a structured pathway for families to secure a child’s financial future, though contributors must carefully navigate distinct tax compliance and mandatory gift reporting rules.

Key Rules & How They Work

• Who can get one: The child must be a U.S. citizen or resident alien under 18 with a valid Social Security Number (SSN). A parent or legal guardian sets up and manages the account for them.
• Contribution limits: You can put in up to $5,000 per year in total. This includes money from parents, relatives, and employers combined. Unlike a regular IRA, the child does not need to have a job or earned income to contribute.
• Help from employers: Employers can contribute up to $2,500 a year as a tax-free perk for the parent. This money isn’t counted as part of the parent’s income, but it does count toward the child’s $5,000 annual limit.
• Free government starter money: Children born between January 1, 2025, and December 31, 2028, qualify for a one-time $1,000 starter contribution sent directly from the U.S. Treasury.
• Safe investing: To protect the money from risky investments, the funds must be placed exclusively into low-cost, broad U.S. stock market index funds or ETFs with very low management fees (capped by law at 0.10%).
• Taxes and growing up: Family contributions are made with after-tax money, meaning you can take that specific money out later without paying taxes on it. The account’s investment growth, employer contributions, and government starter money grow tax deferred. On January 1st of the year the child turns 18, the account automatically converts into a standard traditional IRA.

 How to Open and Fund an Account

1. Go to the online portal or use the form: The setup process must initiate through federal channels. You can enroll online through the official federal portal, TrumpAccounts.gov or file a paper IRS Form 4547 (Election to Establish a Trump Account).
2. Fill in the child’s details: Enter your information as the account custodian, along with the child’s legal name, birth date, and Social Security Number to verify their age.
3. Claim the $1,000 starter bonus: If your child was born in the eligible years (2025–2028), make sure to check the box to claim the one-time $1,000 government seed money during setup.
4. Connect an investment company: While the government tracks the official registry, you can link an approved private brokerage or investment company to handle the money and pick your index funds before public funding officially begins on July 4, 2026.

Trump Account vs. 529 Plan: Quick Comparison

Both accounts are great for kids, but they have completely different goals. A 529 plan is meant for college and school expenses, while a Trump Account is meant to build a long-term nest egg for retirement.

Trump Accounts act as a dedicated vehicle for building early retirement security for minors without the hurdle of traditional earned income requirements. The prime advantages here are the upfront incentives: a one-time $1,000 federal seed contribution for eligible children born between 2025 and 2028, and a tax-free employer match of up to $2,500 annually. Ultimately, while the Trump Account focuses on building a permanent financial foundation, a 529 education savings plan remains the optimal choice if a family’s primary objective is maximizing tax-free growth strictly for high-volume college or trade school tuition.

Geffen Mesher’s team is available to assist you with questions related to these updated rules. Please contact professionals for more information at INFO@GMCO.COM.