Trump Accounts: What Parents and Grandparents Should Know
A new savings tool for kids is here, and the online enrollment is already open! You can set up a Trump Account right now at form.trumpaccounts.gov. Contributions don't start until July 5, 2026, but you can make the election today. Think of these as starter IRAs for children. The account belongs to the child, but a parent or guardian manages it until the child turns 18. After that, standard traditional IRA rules kick in.
The $1,000 Head Start
Kids born between January 1, 2025 and December 31, 2028 are eligible for a one-time $1,000 government seed contribution. That requires filing an election with the IRS on the child's behalf, either through Form 4547 or the website above. If your child or grandchild was born in that window, this is worth paying attention to now.
Tax Benefits
The big draw is tax-deferred growth. Money inside the account grows without being taxed each year, similar to a traditional IRA. Contributions from individuals are made after-tax and aren't taxable when withdrawn. Employer contributions and pre-tax salary deferrals are taxable at withdrawal, as is the government seed contribution.
No earned income is required for the child, which is different from a Roth IRA. Contributions are capped at $5,000 per year. Employers can also contribute up to $2,500 per year per employee into a child's account.
One wrinkle worth flagging: the "kiddie tax." If your child is under 19 (or a full-time student under 24), withdrawals could be taxed at the parent's rate rather than the child's. Something to keep in mind before pulling money out early.
Investments
These accounts are intentionally simple. Investments are limited to low-cost index funds or ETFs tracking the S&P 500 or a similar broad index. Expense ratios are capped at 0.10%. No complexity, no leverage. That's a feature.
No Touching It Until 18
Withdrawals are locked until the child turns 18. After that, standard traditional IRA rules apply. Early withdrawals before 59½ are generally taxable and may carry a 10% penalty, with exceptions for things like a first home purchase (up to $10,000), higher education, disability, and a few others.
A Note for Grandparents: Slow Down
This is where it gets tricky, and I want to make sure you don't get ahead of yourself.
Several grandparents have already rushed to open accounts for their grandchildren. But IRS rules strictly limit who can actually establish a Trump Account, and grandparents are mostly last in line.
Here's how it works. If your grandchild was born on or after January 1, 2025, a grandparent can only make the election (including claiming the $1,000) if the grandchild is your dependent for tax purposes. Otherwise, you're not authorized to open it.
If your grandchild was born before 2025, the order of priority is: legal guardian first, then a parent, then an adult sibling, then a grandparent. You can only open the account if none of those other people are "available" to do so. The IRS hasn't defined what "available" even means yet.
Here's the part that matters: signing Form 4547 or submitting through the website is done under penalty of perjury. The form doesn't explicitly warn you that you may be representing something you can't actually verify. Until the IRS issues clearer guidance, grandparents should hold off unless the grandchild is their dependent or there is genuinely no parent, guardian, or adult sibling in the picture.
If you're a grandparent who wants to contribute, that's still allowed once the account is open. You just generally can't be the one to establish it.
How to Open One (If You're Eligible)
Go to form.trumpaccounts.gov to make your election now. Contributions start July 5, 2026. The Treasury administers the account initially, with rollovers to financial institutions coming later.
The Bottom Line
For parents with young children, this is worth doing. Free $1,000, tax-deferred growth, low-cost index investing, and the election is already open. For grandparents eager to get involved, please check with us before you file anything.
We'll keep watching for IRS guidance as the program rolls out and will update you as things get clearer.
Note: We are CPAs, not financial advisors. This post covers the tax side of Trump Accounts. For investment decisions and how this fits your broader financial picture, please work with your financial advisor. If you need a referral, just ask.
