Trump Investment Accounts for Children: What You Need to Know
- Nisha Mehta, MD
- Jul 9
- 7 min read
The 2025 reconciliation bill, known as the One Big Beautiful Bill, made sweeping changes with implications across healthcare and personal finances. This bill included the creation of Trump investment accounts, which are a new tax-advantaged way to save and invest on behalf of your children. The Trump accounts share some similarities to IRAs and 529 plans, but with key important distinctions. Below, we cover what we know (so far) about these new accounts, including who qualifies, contribution limits, tax advantages, and alternative options parents can also consider.
Please note: at the time of this writing in July 2025, these accounts are a completely new entity. Some of the rules and requirements may change over time as logistics are finalized. While we will do our best to keep this page up to date as more details unfold, we HIGHLY recommend working with a licensed tax professional and/or financial advisor to make sure you are working with the latest information and fully understand the implications of this new legislation before making any decisions.
Disclaimer/Disclosure: Our content is for generalized educational purposes. While we try to ensure it is accurate and updated, we cannot guarantee it. Rules/laws can change frequently. We are not formal financial, legal, or tax professionals and do not provide individualized advice specific to your situation. You should consult these as appropriate and/or do your own due diligence before making decisions based on this page. To learn more, visit our disclaimers and disclosures.
What is the Trump investment account?
“Trump accounts” are a provision included in the One Big Beautiful Bill of 2025 that creates a new type of tax-advantaged investment account. While this account is targeted to help parents save for newborns, these accounts are available to American children under the age of 18.
These accounts offer tax-deferred growth, similar to a traditional IRA, though an important distinction is that they don’t require an earned income for your child in order to invest. They also share features with 529 college savings plans, such as stipulating what expenses qualify for better tax advantages. There are notable differences, such as contribution limits and income requirements, which we cover on more detail below.
Contribution limits for Trump accounts
Parents (and others) can contribute on behalf of a minor, up to $5,000 max a year per kid into a Trump account, until the year the child turns 18. This annual contribution amount is subject to change with annual inflation, beginning in 2027.
Employers may contribute up to $2,500 of the $5,000 annual contribution limit either to a minor employee that works for them or to any dependent of an employee. Employer contributions to a Trump account do not count as income for either the parent or child, providing potential tax-free money if employers wish to include contributions as a benefit. This may be something for physicians who have businesses or employers that offer decide to offer this to keep an eye on.
Requirements to qualify for a Trump account
Unlike traditional IRAs, there are no income limits for either the child or the parents in order to qualify for a Trump account. The only eligibility requirements are:
The child must be a US citizen with a Social Security number
At least one parent must also have a SSN
Prefunding to Trump accounts for newborns
As part of the 2025 One Big Beautiful Bill, children born from January 1st, 2025 to December 31st, 2028 will receive an initial $1,000 investment into their Trump account from the US Treasury.
Kids born before 2025 will still have access to these new types of accounts, though they will not receive the $1,000 prefunding incentive.
Tax benefits of a Trump account
Some of the details of Trump accounts are still being finalized at the time of this writing. A few tax benefits may exist for Trump accounts, though they typically don’t offer the same level of tax advantages of other potential savings accounts such as IRAs and 529 plans. Highlighting a few key points we know so far:
Contributions grow tax-deferred
No current tax deductions or tax credits for contributions
Qualified withdrawals may be taxed at long-term capital gain rates versus higher ordinary income tax rates
Loses tax benefits for distributions if not used for a qualified withdrawal (this is pending further guidance as plan details are put in place)
Details changed from the original proposal versus the version Congress ultimately passed, and they are still being finalized as these new accounts are implemented, including how to establish an account. We want to reiterate the importance of working with a qualified tax professional and/or financial advisor as you look into opening an account to ensure you have the latest guidance.
Investment and distribution considerations with Trump accounts
Trump investment accounts severely limit the type of investments available for contributions. The accounts are required to be invested in a low-cost stock index fund, such as the S&P 500 index fund.
The funds within a Trump account are not meant to be accessed until the child turns 18 and are very difficult to do so until then.
There are only a few qualifying purposes currently listed for Trump accounts. Purposed expenses include:
College tuition/higher education expenses
Small business loan/expense
First-time home purchase
Qualified distributions for these expenses are intended to offer better tax advantages, although it is unclear at this time how much exactly and what other nuances may be present.
Trump accounts vs IRAs
While we’ve highlighted features of the new Trump investment accounts above, we also wanted to provide a summary of how Trump accounts compare to other tax-advantaged savings options.
In order for your child to have an IRA, they must have an earned income. Trump accounts do not have an earned income requirement.
While children with an earned income have the options of both a traditional IRA or a Roth IRA, Trump accounts only offer a tax-deferred option.
Most established IRAs will allow you to invest in numerous types of securities, while Trump accounts are restricted to low-cost index funds.
What is the difference between a Trump account and a 529 plan?
Trump accounts are not specifically created as a college savings plan, though the funds may be used after the age of 18 for college expenses.
As a beneficiary account, 529 college savings plans fall under gift and estate tax exemption rules that dictate much higher annual contribution limits. Opportunities also exist to superfund a 529 plan to help save up significantly for college. No current superfunding option exists for Trump accounts.
While Trump accounts may offer limited tax benefits on distributions, distributions for qualified educational expenses from 529 plans, which also expanded under the One Big Beautiful Bill, are completely tax free.
Should I start a Trump account to save and invest for my child?
If you have a newborn child who qualifies for the free government seed money, it can make sense to open the account to receive the free prefunding amount. Even if you don’t contribute anything else to the account on behalf of your child, with tax-deferred compounding growth over the years, this free money could be well worth your initial time investment of establishing the account.
Putting any money into a Trump plan beyond what the government offers as prefunding or what an employer might offer as an employee benefit, however, may not make sense for all families.
A few reasons why include:
These accounts are fairly complex and rules regarding use and limitations may be confusing
They limit the investments you can use
They offer relatively low contribution limits
Tax-deferred growth and distributions at long-term capital gains are already available through a standard brokerage account (outside of dividends paid) without qualifying expense limitations
While the features of Trump accounts may change in the future, other savings accounts may offer more flexibility and/or great tax advantages. If you’re saving for college for your child, a 529 plan will likely be the better option, providing more tax benefits and higher contribution limits. If you’re helping your child save for retirement, a taxable brokerage account or UTMA may be just as useful with greater flexibility.
For children with an earned income
If your child earns an income, such as being an employee for your private practice, they have the option of opening an IRA. While traditional IRAs and Trump accounts offer tax-deferred growth, a Roth IRA can often be the best option, as they are funded as after-tax dollars and only subject to typically much lower kiddie tax rates. Contributions to Roth IRAs grow tax free, and you don’t have to pay taxes when funds are withdrawn in retirement.
If your child is eligible for a Roth IRA, we highly recommend looking into helping them establish one to get a jumpstart on saving for retirement.
Learn more about Roth IRAs for kids.
How to open a Trump account
At the time of this writing, the program is just starting and details on how to open a designated Trump account are still unclear as the government works through the program logistics. Some guidance suggests that the government may try to automatically open accounts and provide the prefunding incentive to eligible children, but we are awaiting conclusive guidance.
Conclusion
If your child will qualify for the newborn prefunding $1,000 account credit, taking advantage of it can be a great way to help set your child up for investing. For college savings, a 529 plan will likely still be a better option. At this time, a Trump account doesn’t definitively offer substantial tax advantages over other investing options for children, so you may wish to explore UTMAs and taxable brokerage accounts instead for greater flexibility, and/or an IRA for children with reportable income. In general, it's likely prudent to wait until more information comes out before deciding to start one of these accounts, and to consult with appropriate financial expertise in regards to your options once there is more clarity. We will also try and update this page as more information becomes available.
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