WASHINGTON, D.C. — As the Treasury Department and IRS begin rolling out the highly anticipated Trump Accounts, new details are emerging about how these IRA-style savings plans will work for American families. Designed to give newborns a financial “jump start,” the program includes a signature $1,000 federal contribution for eligible children.
Here is the essential breakdown of what parents need to know as the program officially launches this year.
A Trump Account is a tax-deferred savings vehicle created for children under age 18. While it functions similarly to a traditional IRA, it has specific rules regarding who can contribute and when the money can be accessed.
- Eligibility: The child must be a U.S. citizen, have a valid Social Security number, and be under 18 at the end of the year the account is opened.
- The “Growth Period”: Money in the account grows tax-deferred and generally cannot be touched until the child turns 18.
The most talked-about feature is the one-time $1,000 pilot contribution from the federal government.
- Who qualifies? Children born between January 1, 2025, and December 31, 2028.
- The Catch: The money is not automatic. An “authorized individual” (usually a parent or legal guardian) must open the account and elect to receive the contribution.
- Timing: No government deposits will be made earlier than July 4, 2026.
How to Open an Account
To enroll your child, you must fill out IRS Form 4547.
- Current Method: Submit the form electronically with your 2025 federal income tax return.
- Summer 2026: An online portal at trumpaccounts.gov is expected to launch, allowing parents to establish accounts outside of tax filings.
- Activation: Starting in May 2026, the Treasury will send authentication instructions to parents who have filed Form 4547 to officially activate the accounts.
While the government provides the initial seed, families and employers can add to the balance:
| Contributor | Annual Limit | Tax Treatment |
| Family/Friends | Up to $5,000 total* | After-tax (No deduction) |
| Employers | Up to $2,500 | Tax-free to employee |
| States/Philanthropists | Varies | Does not count toward $5,000 limit |
*The $5,000 limit is a combined total for family and employer contributions. This limit will be adjusted for inflation starting in 2027.
All funds must be invested in low-cost, U.S. stock index funds or ETFs (with expense ratios ≤0.10%).
Once the child turns 18, the account functions like a traditional IRA. While funds can be used for college or a first home without penalty, withdrawals for non-approved reasons before age 59½ will trigger a 10% penalty plus ordinary income tax.
“A Trump Account could provide a much-needed source of funds to offset the costs of early adulthood,” notes the Urban Institute, though critics warn that families who cannot afford the annual $5,000 maximum may see significantly less benefit than wealthier households.
