A practical guide for families
One of the best things we can do for our kids is help them learn how money works.
That means teaching them how to save, invest, give, and make smart decisions with what they have.
The new Trump Accounts create another opportunity to do that.
In July 2025, the One Big Beautiful Bill Act created a new investment account for children, structured somewhat like a traditional IRA. The idea is simple: give kids an earlier start on saving and investing before they’re old enough to manage the money themselves.
I’ve had a number of families ask me how these accounts work, who qualifies, and where they might fit alongside other savings options.
Here’s what you need to know.
1. Who Can Have a Trump Account?
Any child under age 18 who is a U.S. citizen and has a Social Security number can have a Trump Account opened in their name.
There is also a special benefit for children born between January 1, 2025 and December 31, 2028. Those children receive a one-time $1,000 contribution from the federal government deposited directly into the account. For a newborn, that $1,000 has a long runway.
Starting the account early gives the money years to grow and gives families a head start on building savings for the child’s future.
2. How Much Can Be Contributed?
Total annual contributions from family members, friends, employers, and other eligible sources are capped at $5,000 per child. The government’s initial $1,000 contribution does not count toward that limit. The contribution limit is also expected to increase with inflation over time.
For families, this creates an exciting opportunity.
Contributions can come from more than one person. Parents, grandparents, other relatives, and even friends can all add to the account. For illustration purposes, if a family started with the $1,000 government contribution and then contributed the full $5,000 each year for 18 years, an average annual return of 10% could grow the account to about $234,000. If that money then remained invested in an IRA until age 60 and continued averaging 10% annually, with no additional contributions, it could grow to approximately $12.8 million.
3. How Is the Money Invested?
A Trump Account works a little differently than a regular brokerage account. You are not picking individual stocks or making frequent trades. The money is invested in a low-cost fund that tracks the S&P 500, currently SPYM.
That simplicity can be a good thing. Building wealth is less about chasing the next big investment and more about starting early, investing consistently, staying diversified, and giving the money time to grow.
4. How Are Trump Accounts Taxed?
The account grows tax-deferred, similar to a traditional IRA. That means taxes aren’t owed each year as the investments grow. Ordinary income tax rules apply when money is eventually withdrawn.
The child also cannot access the account before age 18. At that point, the Trump Account has to be rolled into a Traditional IRA and follows the applicable IRA rules from there. This is not money intended for a child to spend next year on a toy or a new phone. It is long-term money.
This creates an opportunity for parents to teach kids the difference between money for today and money for the future.
5. How Do You Open One?
The U.S. Treasury designated BNY as the financial agent for the program, and BNY partnered with Robinhood to act as the brokerage and initial trustee.
Families begin the process through IRS.gov.
Confirm eligibility. The child must be under 18, have a Social Security number, and be a U.S. citizen.
File IRS Form 4547. Parents, guardians, or other authorized adults use Form 4547, “Trump Account Election(s),” to establish the account. For children born between 2025 and 2028, the form is also used to claim the one-time $1,000 government contribution.
Provide the required information. You’ll need the child’s Social Security number and identifying information for the responsible adult.
Name the responsible adult. A parent or legal guardian oversees the account until the child reaches age 18.
Monitor the account. Families can check account status and make contributions through TrumpAccounts.gov, or the Trump Account official App which is a user-friendly app that you can download on your phone.
In my experience, the account became visible on TrumpAccounts.gov immediately after I submitted the application through IRS.gov. That allowed me to begin checking the account status right away. Because this is still a new federal program involving Treasury, BNY, and Robinhood, some procedures may continue to evolve.
6. Where Can the Money Come From?
One thing I like about these accounts is that funding doesn’t have to come from one place.
There are several potential sources.
The federal government
Children born from January 1, 2025 through December 31, 2028 are eligible for the $1,000 federal seed contribution.
Parents and grandparents
Family members can contribute directly, provided total contributions remain within the annual limit. This can be especially useful for grandparents looking for another way to help the next generation financially. Instead of buying more toys for birthdays or holidays, part of a gift could potentially become an investment in that child’s future.
Employers
Employers can contribute up to $2,500 per year to an employee’s child’s Trump Account, and that contribution is not treated as taxable income to the employee.
The Michael and Susan Dell Foundation
There is also a separate $250 contribution being made available by the Michael and Susan Dell Foundation to certain eligible children. This is different from the federal newborn contribution. It is intended for children age 10 or younger who were born before January 1, 2025 and therefore missed the federal $1,000 newborn benefit. Eligibility also depends on where the family lives. The family’s ZIP code must have a median family income of $150,000 or less. Once eligibility is verified, Treasury and the program administrators coordinate with the Dell Foundation. There is no separate application for the gift itself, although receipt of the contribution can take several weeks.
Friends and Extended Family
Others can contribute as well, similar to the way relatives might contribute to a 529 plan. Again, all eligible contributions need to remain within the applicable annual limit.
7. How I’d Think About Trump Accounts as a Parent
The account itself is only part of the opportunity. It can also be a useful way to help kids develop good financial habits early.
Here are a few ways families might consider using Trump Accounts.
Start early and make it automatic
You do not have to wait until you can make a huge contribution. Small amounts invested consistently over a long period can become meaningful. More importantly, consistency teaches a child that investing is something normal people do regularly, not something you suddenly start thinking about at age 45.
Get grandparents involved
Grandparents often want to help financially but aren’t sure what will have lasting impact. A contribution toward a grandchild’s future can be an alternative to another short-term gift. It may also fit into a family’s broader estate-planning strategy.
Don’t treat this as a replacement for everything else
Trump Accounts are one tool. They aren’t necessarily a substitute for a 529 college savings plan or a custodial UTMA or UGMA account.
Review the strategy every year
This is a new program, and IRS and Treasury guidance is still developing. Rules involving contribution limits, taxation, and qualifying uses can change. Make Trump Accounts part of your annual financial planning conversation rather than something you set up once and forget about.
- A 529 for education.
- A Trump Account for long-term investing and retirement.
- A custodial account for greater flexibility.
The best answer depends on the family’s goals.
8. Use the Account to Teach Your Kids About Money
One of the things I like most about these accounts is the opportunity to use them as a teaching tool.
In my family, when my five-year-old daughter receives money from birthday gifts, chores, or her grandparents, I help her divide it into three categories:
50% to spend
40% to save and invest
10% to give
Going forward, the 40% she saves will be invested through her Trump Account.
For my wife and me, we want our kids to understand that money can be used in different ways. Some can be enjoyed today, some can be invested for the future, and some can be used to help others.
We plan to use the same approach with our younger children as they get older and begin earning or receiving money of their own.
It is a simple system, but it gives us a practical way to start teaching good financial habits while they are still young.
The Bigger Lesson
One thing I’ve seen over the years is that giving kids money is not the same as teaching them how to handle it.
Trump Accounts can be another way for parents and grandparents to start those conversations early. The tax benefits, the government contribution, and the potential for long-term growth all matter. But just as important is helping kids understand how to save, invest, give, and make thoughtful decisions with money.
Over time, those habits can have an even bigger impact than the account itself.
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