WASHINGTON — Families across the United States now have access to a new tax-advantaged savings vehicle designed to jump-start financial security for the next generation.
Officially launched this month under the Working Families Tax Cuts provision of the One Big Beautiful Bill Act, “Trump Accounts” allow parents and guardians to establish starter individual retirement accounts (IRAs) for minor children.
According to projections released by the U.S. Department of the Treasury, a child whose account receives the maximum allowable annual contribution of $5,000 could see their investment balance grow to approximately $170,000 by the time they reach age 18.
Key Features & Seed Funding
Under the new law (IRC §530A), any U.S. child under the age of 18 with a valid Social Security number is eligible to have an account opened in their name.
- $1,000 Federal Seed Deposit: Children who are U.S. citizens born between January 1, 2025, and December 31, 2028, qualify for a one-time $1,000 seed deposit from the U.S. Treasury if a parent or guardian opts in.
- Contribution Limits: Families, relatives, and employers can contribute up to $5,000 annually per child. Employers can contribute up to $2,500 of that total tax-free through workplace contribution programs.
- Low-Cost Investment Structure: To protect growth, investments during childhood are strictly limited by law to low-cost U.S. equity index funds and exchange-traded funds (ETFs) tracking broad market indices, with expense ratios capped at 0.10%.
Rules for Access and Withdrawals
Trump Accounts function similarly to traditional IRAs, with earnings growing tax-deferred.
The funds remain locked until December 31 of the year before the beneficiary turns 18. Once the child reaches adulthood at age 18, control of the account transfers fully to them. Beneficiaries can then choose to let the balance continue growing or make penalty-free withdrawals for qualified major expenses, including:
- First-time home purchases
- College tuition or career and job training expenses
- Capital to launch a small business
How Families Can Apply
Enrollment in the program is not automatic. Parents and guardians can open and manage an account by filing IRS Form 4547 online through the official portal at TrumpAccounts.gov or through the official IRS portal.
